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Financial Highlights
Marubeni Corporation
Years ended March 31

                                                                                                                        Thousands of
                                                                                                                         U.S. Dollars
                                                                             Millions of Yen                               (Note)
                                                              2003                2002                 2001                  2003

For the year :
  Total volume of trading
   transactions                                           ¥8,793,303          ¥8,972,245          ¥9,436,863             $73,277,525

  Gross trading profit                                        424,643            436,804              479,754               3,538,692
  Net income (loss)                                            30,312           (116,418)              15,036                 252,600

At year-end :
  Total assets                                             4,321,482           4,805,669            5,320,604             36,012,350
  Net interest-bearing debt                                2,264,117           2,712,906            3,089,839             18,867,642
  Total shareholders’ equity                                 260,051             263,895              342,297              2,167,092

Amounts per 100 shares (¥/US$) :
 Basic earnings (loss)                                           2,030              (7,792)               1,006                  16.92
 Diluted earnings (loss)                                         1,896              (7,792)                 940                  15.80
 Cash dividends                                                    300                   –                    –                   2.50

Ratios :
  Return on assets (%)                                             0.7                   –                    0.3
  Return on equity (%)                                            11.6                   –                    4.5
  Net D/E ratio (times)                                            8.7                10.3                    9.0
Note: U.S. dollar amounts above and elsewhere in this report are converted from yen, for convenience only, at the prevailing rate
      of ¥120 to US$1 as of March 31, 2003.




Contents

02 _ To Our Stakeholders/ 04_Interview with the President and CEO/ 12_Corporate Governance/14_At a Glance
16_ Strategy by Business Segment
      16_Agri-Marine Products/ 18_Textile/ 20_Forest Products & General Merchandise
      22_Chemicals/ 24_Energy/ 26_Metals & Mineral Resources/ 28_Transportation & Industrial Machinery
      30_Utility & Infrastructure/ 32_Plant & Ship/ 34_Development & Construction/
      36_Finance & Logistics Business/ 38_Telecom & Information/ 40_Business Incubation Department

42_ Risk Management/ 43_Compliance/ 44_Our Commitment to Sustainable Growth
45_ Corporate Citizenship/ 46_Directors, Corporate Auditors and Corporate Vice Presidents
47_ Financial Section/ 84_International Network/ 86_Major Subsidiaries and Affiliates
92_ Organization/ 93_Management Policies at Marubeni/ Corporate Data


Disclaimer Regarding Forward-Looking Statements
This annual report contains forward-looking statements about the performance and management plans of Marubeni and its Group companies,
based on management’s assumptions in light of current information. The following factors may therefore influence actual results. These factors
include consumer trends in Japan and in major global markets, private capital expenditures, currency fluctuations, notably against the U.S.
dollar, materials prices, and political turmoil in certain countries and regions.
 Because we have
 innovative strategies,
 powerful businesses
 and new solutions !
 In November 2001, Marubeni enacted its @ction 21 “A” PLAN             Year ended March 2003
                                                                       Net income ¥30.3 billion
 for the sweeping elimination of non-performing assets.
 Backed by this plan, Marubeni achieved a sharp turnaround in
 performance for the fiscal year ended March 2003,
 with net income of ¥30.3 billion. There is no question that
 Marubeni’s ability to generate profits is improving.
                                                                      30.3                        ex
                                                                                                     t                                  ?
 Without resting on its laurels, Marubeni will take its selectivity                      n
                                                                                  a t is
 and focus drive a step further to attain another spectacular                 h
 leap forward in performance.
                                                                        W




-116.4Year ended March 2002
      Net loss ¥116.4 billion
                                                                                                           For the fiscal year ended March 31, 2003
                                                                                                                                                      Annual Report 2003




                                                                               Marubeni Corporation 2003                          1
       Implementing
       the best management practices !



       To Our Stakeholders



                          Over the last year or so, Marubeni has single-mindedly focused on realizing a dramatic
                          improvement in our earnings structure. In this regard, we have exited from unprofitable
                          businesses, chipped away at interest-bearing debt, cut expenses, and improved
                          the profitability of divisions and subsidiaries—all in accordance with the stated objectives
                          of our “A” PLAN. The result of these actions is that we were able to stage a V-shaped
                          recovery in performance, rebounding from a net loss of ¥116.4 billion in the previous year
                          to a record high of ¥30.3 billion in net income for the year under review.
                                However, the achievement of the “A” PLAN is not our ultimate goal. On April 1, 2003,
                          former President and CEO Tohru Tsuji was appointed Chairman, and Nobuo Katsumata,
                          formerly a Corporate Executive Vice President, took the helm as President and CEO.
                          Chairman Tsuji will lend his invaluable support to Marubeni’s new management team
                          headed by President Katsumata to help the company take another dramatic leap forward.
                                Our new keyword is “From recovery to a leap forward.” In April 2003, we launched
                          a new medium-term management plan called the “V” PLAN (Vitalize Marubeni).
                          Under this plan, we are determined to realize our goal of forging Marubeni into a resilient
                          corporate group possessing the top operational units and business portfolio in the industry.
                                The management and employees of Marubeni are joined in a concerted effort to improve
                          the company’s corporate value and enhance its reputation in the eyes of its stakeholders.
                          To all of our stakeholders, I ask for your continued support and encouragement
                          as we endeavor to reach these goals.




2   Marubeni Corporation 2003
July 2003




Tohru Tsuji   Nobuo Katsumata
Chairman      President and CEO




                             Marubeni Corporation 2003   3
                                                                     Nobuo Katsumata, President and CEO




       Interview with the President and CEO




       Q
                      What are your impressions of                             billion, well ahead of our target of ¥2,500 billion.

                      Marubeni’s @ction 21 “A” PLAN that                       In shareholders’ equity, meanwhile, declining stock prices
                                                                               and foreign currency translation regrettably prevented us
                      recently concluded in March 2003 and
                                                                               from reaching our stated objectives in this area. Still,
                      how would you rate the plan overall?
                                                                               the faster-than-expected reduction of net interest-bearing
                                                                               debt meant that we almost achieved our net D/E ratio target,


        A
                      The plan was a roadmap that emerged from                 with this metric standing at 8.7 times as of March 31, 2003.
                      two pressing concerns: what steps were                        I would certainly say that the “A” PLAN scored perfect
                      necessary to ensure Marubeni’s corporate                 marks in my book. But a company’s future does not start
       survival and how could we achieve a sharp turnaround?                   and end with one year’s good performance. We cannot
       An “A” PLAN Steering Committee was assembled and                        allow ourselves to be satisfied with achieving a V-shaped
       given sweeping powers to drive the plan forward,                        recovery. Essentially, what we have done thus far is place
       quickening the pace of the decision-making process.                     Marubeni in a position where it can finally meet upcoming
            The “A” PLAN called for consolidated net income of                 challenges head-on, including a persistently harsh economic
       ¥30.0 billion, net interest-bearing debt of ¥2,500 billion,             environment. The real battle starts now.
       shareholders’ equity of ¥290.0 billion and a net debt-to-                    The “A” PLAN can certainly be credited with
       equity (D/E) ratio of 8.6 times by the end of March 2003.               reinvigorating both Marubeni’s earnings power and our
       Specific measures called for Marubeni to withdraw from                  internal structure. To parlay this success into more gains,
       unprofitable businesses, lower its interest-bearing debt, cut           we initiated in April 2003 our latest three-year management
       expenses, and improve the profitability of divisions and                plan, known as the “V” PLAN. Improving Marubeni’s
       subsidiaries, with the goal of drastically reforming our                financial position and strengthening our earnings base are
       earnings structure.                                                     the central tenets of this new plan. The plan calls for
            In terms of results, we posted close to an all-time high           consolidated net income of ¥50.0 billion, net interest-bearing
       of ¥30.3 billion in consolidated net income. We consider this           debt of ¥2,000 billion, and a net D/E ratio of 4 to 5 times by
       record performance as ample proof that we have improved                 its scheduled conclusion in March 2006.
       our ability to generate earnings. Reductions in net interest-
       bearing debt also exceeded expectations, falling to ¥2,264.1




4   Marubeni Corporation 2003
Financial Targets




                                        06
                                                                                 “V”PLAN
                                      20
                                   ch
                                 ar
                               dM
                             de                                                                    06
                          en                                                                    20
                       ar s                                                                 rch
                     Ye rget                                                               a
                      Ta                 n                                               dM
                                                                                       de
                                    lio                                             en
                                bil          1                                   ar s
                                                                               Ye rget
                        ,0 00              n*                                                         n
                     ¥2               illio                                     Ta               llio
                                                                                                    bi
                                 0b                                                             0
             st
               -
                         0-5
                             0                                                               ¥5         n
          re t                                                                                       lio
      nte Deb
    tI g             ¥40            n                                                             bil
Ne arin                         lio                                              e             40
 b e         er
                s’          bil                                           Inc
                                                                             om              ¥1
        old             80                                              t            2
      eh                                                             Ne             *
    ar               ¥5                                                          gs
Sh uity                                                                       nin
 E q                                                                        ar
            ts                                                         reE
         se                                      06                  Co
      As                                       20
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                                   en
                                ar s
                              Ye rget
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                                            8.6        es
                                   3
                                                  0 tim
                               rn
                                  *            -5.
                          -re
                             tu            4.0
                        sk
                      Ri
                                 io
                               at
                           /ER                              *1: Including capital enhancement
                        tD
                     Ne                                                    Income
                                                            *2: OperatingEarnings(excluding Provision for Doubtful Accounts) +
                                                                Equity in          (loss) + Dividends

                                                                               Net Income
                                                            *3: Risk-return=   Risk Assets




                                                                                                    Marubeni Corporation 2003   5
                 Financial Targets by Business Model
                                                                                                “V”PLAN
                 — Net Income                                                                                         n
                                                                                                                lio
                                                                                                          bil
                                                                                                     ¥ 30


                                                                                                                    n
                                                                                                                lio
                                                                                                          bil
                                                                         5
                                                                                                     ¥ 50
                                                                    32


                                                                                         1
                                                                                     6
                                                                             43
                                            (7)




                                                                                                60
                      003
                rc h 2 s t )*
             Ma reca




                                                                                40
              (Fo
                                                                                                     Commodity Trade

                                                              20
                      2   006
                  rch                                                                                Project Solution Service
             Ma
                                                  0




                                                                                                     Business Incubation
                            (2
                             ( B ye n

                                0)
                                of
                                illi




                                                                                                                            the announcement of
                                                                                                     * Estimated figures at 2003.
                                     on )




                                                                                                       the plan in February
                                       s




       Q
                      Could you elaborate on how you                              PATRAC, a proprietary performance indicator based on

                      intend to implement portfolio                          the capital cost, will be used to evaluate and judge the
                                                                             performance of these newly formed units. Whether a unit
                      management, one of the central themes
                                                                             delivers positive or negative PATRAC will ultimately
                      of the “V” PLAN?
                                                                             determine its fate. Optimal use of PATRAC in determining
                                                                             the efficacy of our portfolio units and operating companies
                      One of the most vexing issues Marubeni must            will bring greater precision to our efforts toward selection

        A             resolve is how to achieve a steady expansion
                      in earnings while at the same time reducing
                                                                             and concentration of resources. We believe this newfound
                                                                             clarity will translate into desired improvements in
       the company’s level of risk assets. We believe the key to             Marubeni’s earnings, balance sheet and cash flows.
       doing this lies in also managing our business at a lower                   Here’s how. We plan to exit from any unit that, for
       level to divisions as at present. To this end, we reorganized         whatever reason, experiences negative PATRAC for three
       Marubeni’s business segments and subsidiaries into 100 so-            straight years. However, if a unit with currently negative
       called “portfolio units,” based on criteria such as products          PATRAC submits what management believes is a viable
       and services offered, business model, geography and client            plan for achieving positive PATRAC in its third year,
       base. In implementing this change, our main objective was             the unit will be given a chance to prove itself. Whatever
       to accomplish the formerly daunting task of screening out             the case may be, all discussions are now focused on a single
       unprofitable fields and businesses from otherwise good                topic: how will PATRAC change? From that perspective
       divisions, and vice versa. By then rigorously prioritizing            alone, portfolio units will have a clear idea of their target.
       resources we will see steady improvements in overall                  Despite only being launched this past April, this new
       business efficiency.                                                  system has already taken root, with a PATRAC-centric
                                                                             mindset already beginning to permeate the entire Marubeni




6   Marubeni Corporation 2003
                                                              Q
Group. By using PATRAC to evaluate units and operating                      Another major objective of the “V” PLAN
companies, and focusing resources on only the strongest                     involves the clarification of management
units and most promising fields, Marubeni is on
                                                                            strategies according to the specific busi-
increasingly solid ground.
                                                                            ness model concerned. Could you elabo-
      As we apply greater selectivity and focus to our
                                                                            rate further on this point?
portfolio units, we are determined to create a company with
the best portfolio in the industry.


                                                                            As a general trading company, Marubeni
   PATRAC*= Net Income - (Risk Assets x 8%)
   The performance benchmark is a positive PATRAC value.
                                                              A             conducts business across a wide spectrum of
                                                                            areas. The products Marubeni handles and the
                                                                            services it provides span and incorporate
                                                              every industry imaginable, so naturally each business

  (    During the V PLAN (April 2003 – March 2006),
       Risk Asset Cost (Equity cost) is taken to be 8%.

  * PATRAC : Profit After Tax less Risk Asset Cost
                                                          )   model has certain distinctive characteristics and features.
                                                              Logically, it follows that management policies must also
                                                              account for these differences. Devising business strategies
                                                              based on business models, rather than individual
                                                              industries, is vitally important. At Marubeni, our operations
                                                              are divided broadly into three distinct business models:
                                                              commodity trade, project solution services, and business
                                                              incubation. Strategies pertaining to each business model are
                                                              clearly defined, and divisions with similar or complemen-
                                                              tary functions are grouped together. In so doing, our aims
                                                              are to deepen Marubeni’s level of specialization,
                                                              heighten the company’s functions, and achieve gains in
                                                              overall efficiency.




                                                                                                        Marubeni Corporation 2003   7
       Q              Do you believe that Marubeni can                    Products Division in formulating plans for a “Tokyo metro-
                      improve earnings in its strong suit of              politan supermarket alliance” to drive improvements in
                                                                          distribution efficiency by reorganizing the industry. Years ago,
                      commodity trade amid fears that
                                                                          a common notion abounded of transforming convenience
                      growth could be inhibited by
                                                                          stores into IT communication bases. In the end, though, we
                      the maturity of markets?
                                                                          reasoned that enhancing the supermarket business model
                                                                          where we have investments and alliances gives us the greatest
                      The term “commodity trade” can cause some           reward as a trading company.

        A             misunderstanding. It is best I think to consider
                      Marubeni’s role as more of an intermediary for
                                                                              We will also continue to strengthen our presence in other
                                                                          fields where Marubeni has definitive strengths. Among these
       the trade of merchandise. In actuality, of course, Marubeni is     are pulp & paper, in which we have accumulated a wealth of
       far more than an intermediary. Our customers and business          experience, know-how and accomplishments over the years,
       partners demand services from Marubeni that are as diverse as      and electronics materials, where we began making well-placed
       they are sophisticated. For this reason, Marubeni is also          investments in China over a decade ago.
       broadening the scope of its services to encompass merchandise
       development, manufacturing and management consulting.
       Complementing this, we invest along the value chain, from

                                                                          Q
                                                                                        What strategies do you have in
       upstream to downstream areas. Increasing earnings at every
                                                                                        mind for the project solution service
       stage in the value chain that is created is the essence of
                                                                                        business model?
       Marubeni’s commodity trade business model. Through a
       combination of investment and trade, we work to spread our



                                                                          A
       business into every industry possible.                                           In areas such as plant and development and
            Commodity trade is a Marubeni specialty—and an                              construction, Marubeni has spent years
       important field in the context of our overall earnings base.                     gaining the practical know-how, solution-
       This is particularly true when considering the high degree of      oriented skills, and specialized expertise that distinguish
       trust we have won from our customers over many years in this       these areas as outstanding strengths. During the past
       field. The “V” PLAN calls for investments of between ¥100.0        decade, however, the ease with which these businesses
       billion and ¥150.0 billion over its duration, most of which will   received investments and financing resulted in an
       be concentrated in commodity trade. The “V” PLAN targets an        excessively bulky asset portfolio. When the “A” PLAN was
       increase of ¥20.0 billion in net income in the year ending         enacted to streamline assets, this situation invariably led to
       March 31, 2006, compared with the past fiscal year. Of this        enormous write-offs. As a result, business activities in
       increase, we expect the commodity trade to account for ¥11.0       plant-related areas are now conducted without heavy
       billion. That means we must ask whether, for example,              dependence on financing. Based on this stance, we have
       investments in the retail field will really be rewarded with       busied ourselves assembling expertise as an organizer,
       higher earnings. This was the motivation of our Agri-Marine        developer and consultant, transforming this business model




8   Marubeni Corporation 2003
          Financial Targets by Business Model
                                                                                               “V”PLAN
          — Net Interest-bearing Debt                                                                             n
                                                                                                           illio
                                                                                                        0b
                                                                                                ,40
                                                                                              ¥2

                                                                                                                   n
                                                                                   0                            lio
                                                                              11
                                                                                                        bil
                                                                1,0
                                                                    5   0
                                                                                                   ,000
                                                                                              ¥2

                                             4   0
                                         1,2
                                                                  80




                                                                                             3,
                                                            0
                                                         70
           rch




                                                                                              00
        Ma 03




                                                                                   2,




                                                                                               0
    At 20                                        0




                                                                                   50
                 )*                      1,2
                                             2
            as t




                                                                                       0
                                                                  2,
        rec




                                                                   00
    (Fo                                                                                            Commodity Trade


                                                       1,




                                                                        0
                                                        50
             h
         arc
                                                         0
                                             1,




    A t M 006                                                                                      Project Solution Service
                                                 00




          2
                                                  0
                                 50
                                     0




                                                                                                   Business Incubation
                0
                ( B ye n
                   of
                   illi
                        on )




                                                                                                                          the announcement of
                                                                                                   * Estimated figures at 2003.
                                                                                                     the plan in February
                          s




into one centered on providing solutions to our customers.                  while at the same time spreading the risk as you foster the
Marubeni received orders in plant-related areas totaling a                  growth of those budding prospects.
record-high ¥1,500.0 billion in the year ended March 31,
2003, underscoring our superior capabilities in this field.
The recovery in orders and the resounding success of our
overseas IPP business, yet another of Marubeni’s strengths,
are clear indications that it was not too late to steer our
project solution service business model back on track.
One thing it certainly proves is that this business model has
                                                                            Q              Fund procurement is the lifeblood of
                                                                                           any trading house and a vital element
                                                                                           for improving financial position. What
more than enough fight left in it.
                                                                                           specific steps are being taken in this
                                                                                           regard at Marubeni?



Q             Could you give us a brief
              outline of the business incubation
              business model?                                               A
                                                                                           Our somewhat delicate financial position
                                                                                           certainly constitutes the most urgent issue
                                                                                           Marubeni currently faces. The crux of the
                                                                            matter is this: how do we lift shareholders’ equity past its


A
              The business incubation model takes a long-                   current level of ¥260.0 billion to strengthen our balance
              term approach to nurturing the growth of                      sheet? By relentlessly implementing the “V” PLAN, our
              businesses with the potential to become                       hope over its three-year duration is to raise earnings, boost
substantial future earners. Resources are being invested                    equity, and reduce interest-bearing debt to result in a net D/E
largely in biotechnology, nanotechnology, and other new                     ratio of between four and five times.
applied technology fields targeted by the “V” PLAN. In the                      To achieve those objectives, we will redouble our
business incubation model, I believe what is most important                 efforts to raise earnings, and cut net interest-bearing debt to
is to develop an eye for spotting promising opportunities                   below the ¥2,000 billion mark. In addition, we will need to




                                                                                                                          Marubeni Corporation 2003   9
        increase shareholders’ equity by approximately ¥100.0           the execution of business operations. Moreover, the term of
        billion over the next 3 years to place it somewhere in          office for directors is now one year, a move that should
        the neighborhood of ¥400 to ¥500 billion by March 31, 2006.     imbue management with more vigor than ever before.
        In doing so, we will try to bring shareholders’ equity as           In May 2003, we set up the Advisory Committee in an
        close as possible to a level that covers our achieving          effort to turn Marubeni into a company with an even higher
        a financial position sturdy enough to withstand even            degree of transparency. This committee ensures that views
        the highest degree of risk, thereby regaining the trust of      and opinions from outside are reflected in management
        the capital markets. That said, the effects of share dilution   decisions taken throughout Marubeni. Changes have also
        and share pricing must be carefully weighed in our              been made to the Management Remuneration Committee,
        decisions to raise shareholders’ equity.                        which now includes auditors from outside the company.
                                                                        Furthermore, we recently established the Corporate
                                                                        Auditor’s Office to bolster internal audit functions, giving


        Q              In this challenging economic landscape,
                       the implication of major corporations in
                       Japan and elsewhere in a host of
                                                                        Marubeni a system fully equipped to carry out corporate
                                                                        audits. IR activities are also extremely important to
                                                                        ensuring highly transparent management. For my part, I am
                                                                        personally working to proactively disclose information and
                       scandals has heightened awareness
                                                                        create other opportunities for increased IR activities
                       regarding corporate governance.
                                                                        at Marubeni.
                       What is your stance on corporate
                       governance and how do you intend to


                                                                        Q
                       enhance such activities at Marubeni?                            Next to corporate governance,
                                                                                       compliance is another issue of which
                       Actually, we have enacted a number of

         A
                                                                                       stakeholders have become much more
                       corporate governance measures during the                        aware as of late. What is your stance
                       past two years. At March 31, 2002, Marubeni
                                                                                       and what measures do you have
        had 26 directors. As of June 30, 2003, that number stood at
                                                                                       regarding this issue?
        11. The small number of directors will facilitate faster
        decision-making. All of our chief operating officers have
        also been appointed to the position of corporate vice
        president. With these steps, we have further separated
        management oversight and responsibility for




10   Marubeni Corporation 2003
A
              I believe that the job of a general trading        ethical values in all employees of the Marubeni Group.
              company is to act as a kind of wide-ranging        Moreover, we have established what we call the “Door of
              service company. We should first provide           Courage” as a point of contact for employees wishing to
customers with functions and services well matched to their      report compliance-related concerns.
particular needs. As customers recognize our capacity to
meet their requirements, the extent to which they value
what we can provide will then materialize into profits. In
other words, it is important to have a sense that one is
“earning” profits, as opposed to merely “making” profits.
                                                                 Q             In closing , are there any sentiments you
                                                                               wish to convey to our stakeholders?

    When we hear the word “compliance,” the image that
usually springs to mind is one of adherence to the law.                        At this moment, my top priority and the goal to
Compliance, though, is not simply about fulfilling basic legal
obligations. As I see it, the most important aspect of
                                                                 A             which I am firmly and whole-heartedly
                                                                               committed is the successful completion of the
compliance is to constantly review the ethical standpoints       “V” PLAN. I am fully prepared to usher in any and all reforms
and common knowledge of every employee and every                 required to reach this goal. I have sent emails to all Marubeni
director in the Marubeni Group to ensure that no gaps exist      employees informing them of my commitment, and have
when compared against the standards and knowledge of             taken time to respond to each of the questions they have asked
society at large. By allowing the “earning profits as opposed    me in return. Everyone at Marubeni appears to share the same
to making profits“ mindset to permeate the entire Group, all     sense of urgency and apprehension for what lies ahead. But I
employees can feel confident in their actions and decisions      also sense among them a strong feeling of solidarity, of shared
on the company’s behalf. This trend ultimately raises            purpose. Marubeni possesses the structure and resources
Marubeni’s standing as a good corporate citizen.                 required to take a spectacular leap forward to its next stage of
    Marubeni takes very seriously any scandals involving         growth. The question being posed to me now is: to what extent
Group companies. In May 2002, in an effort to prevent the        can I as president maximize this position and utilize it to
recurrence of scandals that call our sincerity as a corporate    Marubeni’s advantage? As an answer, I will pledge to our
citizen into question and to maintain our existence as a         stakeholders only this—that I plan to implement the “V”
sound corporate enterprise, we established a compliance          PLAN with a degree of speed and decisiveness they have
committee. Specific measures taken by the committee to           never witnessed before to turn Marubeni into a resilient
strengthen Marubeni’s compliance structure include the           corporate group imbued with an indomitable will to survive.
drafting of the Compliance Manual, as well as training               In these endeavors, many will marvel at what
aimed at instilling the spirit of corporate governance and       Marubeni accomplishes in the years ahead.




                                                                                                             Marubeni Corporation 2003   11
        Implementing
        the best management practices !



        Corporate Governance




                        Enhanced corporate governance is indispensable to achieving the objectives of
                        “V” PLAN, Marubeni’s current medium-term management plan. That is why
                        Marubeni is implementing initiatives aimed at reform of its current system of
                        corporate governance. Placing greater emphasis on transparency for shareholders
                        and other stakeholders, these actions will improve checks on management and
                        management oversight.


                        Members of the Board




                                                                                                 Shigeki Kuwahara
                                                   Yuji Kato                                     Executive Deputy President
                                                   Corporate Executive Vice
                                                   President




                             Nobuo Katsumata
                             President and CEO
                                                                              Tohru Tsuji
                                                                              Chairman



12   Marubeni Corporation 2003
   Specific measures                                                      importance. With this in mind, Marubeni established the
   Marubeni downsized its Board of Directors from 26 members              Advisory Committee as a forum for advice and suggestions
   (for the fiscal year ended March 31, 2002) to its current 11           from academic experts, economists, attorneys, cultural
   member-size to make the Board more dynamic in its activi-              figures and others. This committee will be instrumental in
   ties. All chief operating officers have also been appointed to         improving the transparency and soundness of the company,
   the position of corporate vice president. From these actions,          and enabling Marubeni to better refine its corporate culture.
   Marubeni has gained a system that clearly separates respon-            The Advisory Committee is scheduled to convene three
   sibilities for management from the execution of business               times yearly, presenting management as a whole with
   operations, and allows chief operating officers to concentrate         invaluable opportunities to hear and exchange opinions
   completely on their business units.                                    that can be channeled into the creation of effective business
        Furthermore, in April 2003, terms of office for Board             strategy in the years ahead.
   members were changed from 2 years to 1 year as a further
   step to invigorate management. Marubeni will enhance the               Establishment of the Corporate Auditor’s
   transparency of its management by means of the newly                   Office
   established Advisory Committee and Corporate Auditor’s                 In April 2003, Marubeni set up the Corporate Auditor’s
   Office, and the inclusion of outside expertise on its Manage-          Office as a means of facilitating and strengthening the
   ment Remuneration Committee.                                           capacity of corporate auditors to execute their duties. The
                                                                          office staff serves to support Corporate Auditors in fulfilling
   Establishment of the Advisory Committee                                their auditing functions. Moreover, Marubeni has nearly
   Because Marubeni operates across a broad spectrum of                   doubled the staff of its Audit Department. This infusion of
   business fields, having access to outside viewpoints and               personnel is expected to result in stronger auditing func-
   opinions when deciding on policy is a matter of vital                  tions throughout the entire Marubeni Group.




                                                                                             Kazuo Ogawa (Left)
                                                                                             Corporate Senior Vice President
                                                                                             Makoto Isogai (Right)
                                                                                             Corporate Senior Vice President

                            Toshio Nakagawa
                            Corporate Executive
                            Vice President




Tomoyuki
Nakayama      (Left)
                                                            Akira Matsuda
Corporate Senior Vice                                       Corporate Senior                                                    Katsuo Koh
President                                                   Vice President
                                                                                                                                Executive Deputy President
Susumu
Watanabe (Right)
Corporate Senior Vice
President                                                                                                                Marubeni Corporation 2003     13
         At a Glance

                                                                                            Main Products
         Segment                                      Percentage of Total                                                             Highlights
                                                                                            and Services

                                                                                           • Production, sales and transport          • Trading transactions: ¥1,023,513 million
                                                                                             of products associated with              • Segment assets:          ¥347,483 million
                                                                    11.6%                    food and food production,                • The division entered an alliance with Tobu Store Co.,
                                                                                             including agricultural and                 Ltd., a major Japanese supermarket chain, which also
         Agri-Marine                                                                         marine products, processed                 saw it take an equity stake of 12.5%.
                                                                                             foods, beverages, livestock              • Opened the first and second outlets of Metro Cash & Carry
         Products                                                                            feed, fertilizer, and related raw          Japan K.K., a joint venture with Metro AG of Germany.
                                                                                                                                      • U.S.-based subsidiary Columbia Grain International, Inc.
                                                                                             materials
                                                                     8.0%                                                               extended its grain procurement network through a
                                                                                                                                        business tie-up with General Mills, Inc., one of the
                                                                                                                                        largest producers of flour and grain in the United States.


                                                                                           • Engaged in every stage of the            • Trading transactions: ¥370,277 million
                                                                                             textile business from raw                • Segment assets:         ¥123,868 million
                                                                      4.2%                   materials through to finished            • The division is actively forming alliances with leading
                                                                                             products, including planning,              Japanese textile manufacturers to establish and
                                                                                             procurement, production, sales,            expand production bases in China, which is gaining
         Textile                                                                             logistics and retail outlet                greater self-sufficiency in textile materials.
                                                                                             management                               • In addition, the division is also targeting China’s
                                                                                                                                        enormous consumer market, having established the
                                                                     2.9%                                                               country’s first foreign-affiliated garment wholesaler.




                                                                                           • Sales of footwear, rubber                • Trading transactions: ¥745,776 million
                                                                                             products and building materials          • Segment assets:         ¥299,009 million
                                                                      8.5%                 • Production and sales of paper            • Despite weak market prices, cost reductions helped
         Forest Products &                                                                   pulp, paper and paperboard                 Canada-based pulp manufacturer Daishowa-Marubeni
                                                                                           • Afforestation projects                     International Ltd. turn results around.
         General                                                                                                                      • Well Corporation, an operator of recycled-paper yards,
                                                                                                                                        was established by Marubeni Paper Recycle Co., Ltd.
         Merchandise
                                                                                                                                        to strengthen its capacity to handle recycled paper.
                                                                     6.9%

                                                                                           • Business operations related to           • Trading transactions: ¥569,928 million
                                                                                             petrochemicals, plastics,                • Segment assets:         ¥147,420 million
                                                                      6.5%                   inorganic chemicals, specialty           • Petrochemical product transactions were strong due to
                                                                                             chemicals, electronic materials,           rising prices brought on by higher crude oil and
                                                                                             and the fields of biotechnology            naphtha prices in the second half of the fiscal year.
         Chemicals                                                                           and recycling                            • The division built a system for providing optimum
                                                                                                                                        solutions across the spectrum of electronic materials
                                                                                                                                        with the establishment in July 2002 of a company
                                                                     3.4%                                                               in Shanghai specializing in the trading of
                                                                                                                                        electronic materials.



                                                                                           • Resource development for oil,            • Trading transactions: ¥2,309,753 million
                                                                                             gas, nuclear and other                   • Segment assets:           ¥348,338 million
                                                                      26.3%                  commercially viable forms of             • The division acquired E & P rights to the Fairway Gas
                                                                                             energy; related marketing                  field in the U.S. The division’s investment in the same
                                                                                             business, including retail                 field also entitles it to receive the oil equivalent of 6,500
         Energy                                                                              operations such as resource                barrels/day of natural gas.
                                                                                             trade and gasoline filling stations      • The division is also involved in the development of the
                                                                                                                                        Sycamore oil field in the North Sea, and its share of
                                                                     8.1%                                                               daily production has risen to 18,000 barrels.




                                                                                           • Overseas metal resource                  • Trading transactions: ¥442,344 million
                                                                                             development, including aluminum          • Segment assets:         ¥157,820 million
                                                                     5.0%                    smelting and the development of          • Work progressed smoothly to ramp up production
                                                                                             mines both for non-ferrous metals          capacity at Aluminerie Alouette, an aluminum smelter in
         Metals &                                                                            and ore used in steel production           Canada. When operating at full capacity, the smelter
                                                                                           • Sale of raw materials for steel            will have an annual output of 550,000 metric tons
         Mineral Resources                                                                   production (iron ore, coal, ferro          (Marubeni’s share is 37,000 metric tons).
                                                                                             alloys), non-ferrous metals such as      • Total annual production at the four Australian coal mines
                                                                     3.7%                    copper, zinc, and aluminum, and            the division is involved in through Marubeni Coal Pty. Ltd.
                                                                                             precious metals                            climbed 10% year-on-year to 11,000,000 metric tons.


      Note: Segment performance throughout this report is based on business results for the year ended March 31, 2003. Information regarding business lines, products and services is as of April 2003.



14   Marubeni Corporation 2003
                                            Segment trading transactions as percentage of total                  Segment assets as percentage of total



                                               Main Products
Segment               Percentage of Total                                                    Highlights
                                               and Services

                                               • Import of airliners, and defense and        • Trading transactions: ¥776,578 million
                                                 aerospace equipment                         • Segment assets:         ¥292,581 million
                                 8.8%          • Export, wholesale and retail of
                                                 automobiles and construction, forestry,
                                                                                             • The division received an order from Hokuetsu Paper
Transportation &                                 and agricultural machinery
                                                                                               Mills, Ltd. for a 2,900 metric ton/day soda recovery
                                               • Import and domestic sales of large-scale
                                                                                               boiler/steam turbine power generator, the largest
Industrial                                       industrial and automotive machinery, as       in Japan.
                                                 well as printing, environmental, and food   • An order worth approximately ¥2 billion was received
Machinery
                                                 processing machinery                          from the Irrigation Department, Ministry of Agriculture
                                 6.8%          • Wholesale and retail of computer              and Irrigation, the Union of Myanmar, for 133 units of
                                                 hardware, software and peripherals;           equipment, consisting of trucks and construction
                                                 sales of medical equipment                    machinery.

                                               • Development and operations of               • Trading transactions: ¥421,850 million
                                                 power, water and solid waste                • Segment assets:       ¥232,197 million
                                 4.8%            management projects                         • To expand overseas operations, the division secured
                                               • Machinery supply and                          power generation assets with gross capacity of 5,000-
Utility &                                        construction of power plants,                 megawatts, and wind power assets in Japan of 50-
                                                 transportation infrastructure                 megawatts.
Infrastructure                                   such as railways and airports,              • The division received orders for construction of
                                                 and water and waste                           the Shuweihat Water Transmission scheme (480
                                 5.4%            management projects                           kilometers) in the UAE and a renovation project for
                                                                                               the Astana International Airport in Kazakhstan.


                                               • Handling of projects and                    • Trading transactions: ¥736,476 million
                                                 equipment related to                        • Segment assets:        ¥392,244 million
                                 8.4%            steel-making, cement,                       • Orders were received for steel plants from several
                                                 petrochemicals, fertilizer, oil               companies, including Tubarao of Brazil, Baoshan of
                                                 refining and natural gas                      China, and Eregli of Turkey.
Plant & Ship                                   • Supply and trading of various               • In energy and chemical plants, orders were received
                                                 types of new and secondhand                   for petrochemical, oil and gas plants largely from Africa,
                                                 vessels and ship materials                    the Middle East, the CIS, and China.
                                 9.1%          • Ship finance, owing and                     • In the ship business, orders were received for over 30
                                                 chartering                                    new vessels.


                                               • Housing development in Japan,               • Trading transactions: ¥185,840 million
                                                 primarily condominiums                      • Segment assets:         ¥376,963 million
                                 2.1%          • Leasing and subleasing of                   • Condominiums performed well for the division,
                                                 commercial building and                       particularly for properties located in and around Tokyo.
Development &                                    management of real estate                   • Overseas, positive sales continue for division housing
                                                 funds in Japan                                projects in Shanghai, with other new projects also on
Construction                                   • Residential housing develop-                  the drawing board.
                                                 ment overseas
                                 8.7%

                                               • Operation of businesses related             • Trading transactions: ¥37,834 million
                                                 to funds, financing services,               • Segment assets:         ¥169,504 million
                                 0.4%            and insurance; trading and                  • The division operates a container terminal business at
                                                 dealing of financial products                 Thailand’s Laem Chabang port, handling one of the top
Finance & Logistics                            • Operation of forwarding and                   shares of such business at the port and contributing to
                                                 third-party logistics (3PL)                   the development of Thailand’s industry and economy.
Business                                         businesses, logistics-related               • The division built upon its success in management
                                                 consulting, and container                     buy-in (MBI) funds to structure new funds designed to
                                 3.9%            terminal businesses                           rehabilitate struggling companies.




                                               • Telecommunication network                   • Trading transactions: ¥386,162 million
                                                 infrastructure businesses                   • Segment assets:        ¥245,103 million
                                 4.4%          • Export and construction of                  • The division’s mobile phone business in Japan turned
                                                 security-related facilities and               in a steady performance.
Telecom &                                        telecommunication network                   • The division is assembling a capable team for its IT
                                                 facilities for overseas clients               solutions business targeting enterprises and govern-
Information                                    • IT solution service                           ment agencies in Japan and elsewhere, with full-scale
                                               • Mobile service and cable                      services set to commence in the current fiscal year.
                                 5.7%            television businesses
                                               • ASP/ISP businesses




                                                                                                                             Marubeni Corporation 2003      15
                                                                                           Agri-Marine Products Division




        Strategy by Business Segment                                                          Cereals & Sugar Unit
                                                                                              Grain & Feedstuff Unit
                                                                                              Oilseeds, Fats & Oils Unit
                                                                                              Beverage Unit
                                                                                              Foods Merchandising Unit
                                                                                              Foods Marketing Project Unit
                                                                                              Farm Products Unit
        Agri-Marine Products                                                                  Meat & Seafood Unit
                                                                                              Osaka Foodstuff Unit
        Division




        Message from the COO                                             Division Strategies and Strengths
         Trading companies play two vital roles in Japan’s food          Grain trading is a competitive strength for the division. The
        sector. The first is as a conduit for the movement of food       division is the top player in feed such as corn and ranks
        and natural resources from overseas to Japan, which has a        second in wheat and soybeans among Japanese trading firms
        low degree of self-sufficiency in these areas, ensuring stable   in terms of volume. To ensure stable supplies, the division
        imports of food. The comprehensive nature of trading             has bolstered its in-house collection function while strength-
        companies allow them to address everything from purchas-         ening its relationships with major food producers. To
        ing, and shipment logistics, to fluctuations in exchange         illustrate, the division has teamed up with Archer Daniels
        rates and prices for heavily imported staple foods such as       Midland Company to create a mechanism for the import of
        wheat, soybeans, and corn. The second role is to develop         non-genetically modified organisms.
        and efficiently serve consumers with products that meet              The division’s in-house collection function includes
        their needs. The division ensures products that consumers        Columbia Grain International, Inc., one of the largest grain
        seek by developing products through its global network           collection and export bases on the U.S. West Coast. In 2002,
        and by creating logistics mechanisms, including the              the division forged a business alliance with General Mills,
        construction of systems driven by supply chain manage-           Inc., one of the largest processors of grain in the United
        ment. Highly cognizant of the importance of this social          States, for the collection of wheat in Montana, a major
        mission and role, Marubeni aims to contribute to society         grain-producing state. With this move, the division further
        through this business.                                           expanded its food collection network.
                                                                             The division also maintains grain silos and feed blend
                                                                         plants in Japan to facilitate greater integration of distribu-
                                                                         tion channels from overseas producing areas to the supply
                                                                         points in Japan. In October 2003, Marubeni Shiryo Co., Ltd.,
                                                                         a subsidiary of Marubeni, merged with Nisshin Feed, Inc.,
                                                                         a subsidiary of Nisshin Seifun Group, Inc., creating
                                                                         Marubeni-Nisshin Feed, Inc., now one of the leading feed
                                                                         companies in Japan in terms of market share.




16   Marubeni Corporation 2003
Segment Assets                                             Segment Net Income
( At March 31)                                             ( Years ended March 31)



                                                                                                                79
                                             86                                                        8,6
                                       0,0
                                  35
                                             56
                                       6,4
                                  34
                                             83                                                            66




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                                                                                                                                                Tetsuro Sakamoto
                                                                                                                                                Corporate Vice President, COO



          In close-to-the-consumer downstream operations, in                                           and society gradually become more consumer-oriented.
2001, Marubeni invested in Maruetsu, Inc., one of the                                                  Moreover, the division works to create highly efficient
largest supermarket operators in the Tokyo Metropolitan                                                logistics mechanisms by leveraging information technology
area. In 2003, Marubeni concluded a capital and business                                               (IT) and logistics technology (LT).
alliance with Tobu Store Co., Ltd., another major supermar-                                                          The division also seeks to capitalize on opportunities
ket operator in the Tokyo Metropolitan area. By pursuing                                               in new areas. For example, in food wholesale business,
alliances in the logistics and retail industries, including                                            the division has set up a joint venture with Metro AG, one
supermarkets that serve as direct conduits to end users, the                                           of the world’s largest wholesale and retail companies, to
division is able to work with partners to create products                                              create Japan’s first full-fledged cash-and-carry wholesale
that better meet consumer needs, as both Japan’s economy                                               food business.




  Business Topics                                                Launch of Metro Cash & Carry Japan                                  Marubeni Shiryo and Nisshin Feed
                                                                                                                                     combine operations
                                                                 Metro Cash & Carry Japan (Metro Japan), a joint
                                                                 venture between Marubeni and Metro AG,                              Marubeni Shiryo and Nisshin Feed have agreed
                                                                 opened its first outlet in December 2002 in Chiba                   to combine their operations in October 2003. The
                                                                 Prefecture and its second outlet in Saitama                         new company will be called Marubeni -Nisshin
                                                                 Prefecture in February 2003. Metro Japan thus                       Feed, Inc., with Marubeni holding a 60% stake
Investment in Tobu Store Co., Ltd.                               became Japan’s first full-fledged wholesale food                    and Nisshin Seifun Group a 40% stake. The new
Marubeni and Maruetsu concluded a capital and                    business operating on a cash-and-carry format.                      company will have sales exceeding ¥100 billion
business alliance with Tobu Store Co., Ltd., in                  Metro Japan offers a broad range                                    and will possess the top share in livestock feed
January 2003, with Marubeni taking a 12.5%                       of high quality products at a reasonable price                      and marine feed in the industry, excluding
stake. Marubeni will supply trading company                      aimed exclusively at foodservice customers, such                    National Federation of Agricultural Cooperative
functions, including the development and supply                  as restaurants and hotels, under a one-stop-                        Associations. By deploying corporate resources
of products that meet consumer needs, as well                    shopping format.                                                    with maximum efficiency, Marubeni-Nisshin aims
as the development and operation of information                                                                                      to establish competitive advantages in all areas,
and logistics systems, working with other alliance                                                                                   including costs, sales, and product quality. In
partners to improve the capabilities of Tobu Store.                                                                                  doing so, the company aims to emerge as the
                                                                                                                                     leading company in the feed mixture industry.




One of the Tobu Store supermarkets                               Metro Japan’s first flagship store in Chiba city                    Kashima Factory of Marubeni Shiryo




                                                                                                                                                              Marubeni Corporation 2003   17
                                                                                           Textile Division




        Strategy by Business Segment                                                          Apparel Unit
                                                                                              Apparel Retail Unit
                                                                                              Utility Apparel Unit
                                                                                              Textile Raw Material Unit
                                                                                              Textile Unit
                                                                                              Industrial Material & Interior Furnishings Unit

        Textile
        Division




        Message from the COO                                             Marubeni Textile Asia Ltd. and Marubeni Textile (Shanghai)
        The Textile Division belongs to the consumer goods industry      Co., Ltd., source of the division’s strengths in materials
        under a commodity trade-oriented business model. The             proposals and procurement, and Passport Fashion Company
        division aims to add value by carrying out integrated            Limited, responsible for overseeing production control of
        functions across the consumer goods market, from materials       apparel overseas. In addition, the division offers a range of
        to made-up products, based on consumer market trends. The        services through Marubeni Fashion Planning Corporation.
        division handles a broad range of consumer goods, from           Though focused mainly on planning proposals and consulting,
        clothing and materials, such as fiber, yarn, and textiles, to    the company also renders services in the areas of marketing,
        interior and bedding, miscellaneous goods and a variety of       product planning, outlet design, and store management.
        industrial materials. The division has been reorganized into     The company is also committed to building long-term
        six portfolio units to become more competitive in each           alliance-based businesses with the division’s customers.
        operating area. To intensify consolidated management in              In the global textile market, trading of made-up
        each unit enables the division to integrate strategy, optimize   garments is expected to expand, fueled by China’s remark-
        the deployment of corporate resources, and execute multiple      able growth as the world’s manufacturing center following
        functions that emphasize specialization and planning and         its entry into the World Trade Organization. The division is
        marketing skills. As a whole, this enables the division to       aggressively expanding its global transactions by emphasiz-
        better meet customer expectations.                               ing Asia, mainly China, as a production base for offshore
                                                                         trade of garments bound for Europe and the United States.
        Division Strategies and Strengths                                It is also leveraging the production infrastructure that has
        Japanese apparel companies are increasingly concentrating        arisen to support exports to Japan and exploiting sales
        their resources on stores and other sales activities by          methods that have been refined in the Japanese market,
        outsourcing production, including planning, amid the             where standards are very high.
        intensifying competition in the domestic retail market               Specifically, in anticipation of China achieving greater
        brought on by diversifying consumption patterns and              self-sufficiency in textile materials, the division aims to
        falling prices in the consumer market. The division strives      strengthen production bases in China, in both upstream and
        to increase import volume by executing a broad range of          downstream areas and at every stage of the production
        functions. Overseas, it carries out materials procurement        process, from finished apparel to materials for consumer
        and production and the oversight of sewing processes,            goods and industrial materials. It is doing this by teaming
        while effectively utilizing distribution networks both in        up with leading Japanese textile manufacturers that boast
        Japan and abroad. Because customer needs are becoming            world-class technologies. Simultaneously, the division is
        more complex, the division complements its own strengths         maintaining and upgrading its domestic bases for the
        by tapping the highly specialized capabilities of subsidiaries   production of highly functional materials and differentiated




18   Marubeni Corporation 2003
Segment Assets                                                      Segment Net Income
( At March 31)                                                      ( Years ended March 31)



                                                      97
                                                4,0
                                           18
                                                                                                                         5   2
                                                                                                                     1,3
                                      ,5   03                                                                                3   4
                              1    50                                                            2)                      1,9
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                                                                                                                                               Hiroshi Koyabu
                                                                                                                                               Corporate Vice President, COO




products while focusing on the development of products                                                                tion, which pioneered the cash-and-carry wholesale textile
that cater to the global market.                                                                                      business in Japan, to establish China’s first foreign-affiliated
         The division is also focusing on domestic sales in China                                                     cash-and-carry wholesale business for garments and
in tandem with expansion of production bases. Its economic                                                            personal items. The venture has already commenced sales in
expansion and vibrant consumer markets point to contin-                                                               China. By deploying a business model that has proved
ued growth in domestic demand. As one response, the                                                                   successful in Japan, the division is contributing to the
division has teamed up with industry leader Self Corpora-                                                             modernization of China’s distribution systems.




  Business Topics                                                         to expand production capacity and improve                          carpets, a type of product for which output in
                                                                          technology and product development capabilities.                   China is insufficient. In addition to these
                                                                          Marubeni has also taken a stake in Jiangyin Ishida                 investments, Marubeni has large-scale projects
                                                                          Rope Mfg. Co., Ltd., which is a fiber-rope                         set to come online after April 2003.
                                                                          manufacturer and is aiming to expand into the
                                                                          industrial material field.                                         Introduction of the Russell Athletic
Expansion of production bases                                             Another company in which Marubeni acquired a                       brand to the Japanese market
in China                                                                  stake in 2002 is Komatsu Seiren (Shanghai) Sports                  Marubeni has teamed up with Russell Corpora-
Marubeni is focusing on the expansion of its bases                        & Fashion Co., Ltd. Marubeni joined Komatsu                        tion, widely recognized as one of the foremost
in China, recognizing that the nation represents not                      Seiren Co., Ltd., a leader in the fabric dyeing and                makers and marketers of sportswear in the
only a major production base but also a substantial                       processing industry, in providing capital for this                 United States since the 1930s, to introduce the
consumer market. One example is Jiangyin Nikke                            manufacturer of sports and casual wear. Finally,                   Russell Athletic brand to the Japanese market.
Worsted Spinning Co., Ltd. Marubeni invested in                           Marubeni has invested in Suzhou Marusho Textile                    The Russell Athletic brand boasts the top share of
this company, along with Nippon Keori Kaisha, Ltd.,                       Co., Ltd., which produces worsted yarn used in                     the market for uniforms for professional and
                                                                                                                                                                college teams, mainly American
                                                                                                                                                                football, baseball and basketball.
                                                                                                                                                                By utilizing Marubeni’s
                                                                                                                                                                production bases in Japan and
                                                                                                                                                                overseas, uniforms can be
                                                                                                                                                                delivered to Japanese
                                                                                                                                                                consumers within three weeks
                                                                                                                                                                after an order is placed.
                                                                                                                                                                Marubeni works with Imoto Co.,
                                                                                                                                                                Ltd., to wholesale sporting
                                                                                                                                                                goods and has joined forces
                                                                                                                                                                with Xebio Co., Ltd., on the
                                                                                                                                                                retail side.
Suzhou Marusho Textile Co., Ltd.                                                                 Russell Athletic brand products




                                                                                                                                                                       Marubeni Corporation 2003     19
                                                                                           Forest Products &
                                                                                           General Merchandise Division


        Strategy by Business Segment                                                          Rubber Unit
                                                                                              Hide, Leather & Footwear Unit
                                                                                              General Merchandise & New Products Unit
                                                                                              Housing & Construction Materials Unit
                                                                                              Leisure Business Unit
        Forest Products &                                                                     Pulp Unit
                                                                                              Wood Chip Unit
        General Merchandise                                                                   Printing & Publication Paper Unit
                                                                                              Packaging Paper & Board Unit

        Division                                                                              Osaka Pulp, Paper & Paperboard Unit




        Message from the COO                                             Japanese footwear makers on an OEM basis. Another impor-
        The Forest Products & General Merchandise Division operates      tant company is Marubeni Footwear Inc., which wholesales
        businesses that leverage both production and marketing           overseas footwear brands and engages in the retail business by
        functions. Simultaneously, it aims to find new products and      operating The Athlete’s Foot Japan. Marubeni handles 7–8% of
        create new business models.                                      the approximately ¥300 billion in footwear imported into Japan
             In general merchandise, the division handles various        each year.
        products such as natural rubber, leather, footwear, and          3. Paper and paperboard The division has forged close
        construction materials.                                          alliances with paper manufacturers both domestically and
             In pulp and paper, the division and numerous subsidiaries   overseas, mainly in Finland. The division also operates its own
        in Japan and abroad are active at every stage of the business,   paper manufacturers, sales agencies and logistic companies.
        such as plantation, manufacture of pulp and paper, paper             Consequently, the division has established a presence in a
        processing, and sales. The division also strives to expand its   broad array of fields, including newsprint, publication paper,
        global presence and strengthen its comprehensive capabilities    printing paper and information paper. In addition, the division
        as a group by creating new functions, including e-commerce       focuses on online sales of printing paper through FORESTNET
        platforms that address ever-changing needs in distribution,      Co., Ltd. at http://www.f-n.co.jp. Overseas, the division has
        and the construction of paper-recycling networks that address    established sales bases in North America and Europe to
        the needs of a recycling-oriented society.                       facilitate worldwide market research activities and sales.
                                                                             In the business of paperboard, the division operates two
        Division Strategies and Strengths                                recycling-oriented companies, Koa Kogyo Co., Ltd., and
        The division aims to expand its product lineups in the follow-   Fukuyama Paper Co., Ltd., that make the environment a
        ing areas:                                                       priority and strengthen relations with domestic paper manu-
        1. Natural rubber The division seeks to increase profits from    facturers and expand sales to key customers.
        the business of natural rubber production by adding a trading        The division participates actively in new businesses in
        function. In addition, the division, as a world-leading rubber   Japan and abroad and wholly demonstrates the functions of the
        trader handling around 5% of the global rubber market, is        Marubeni Group. As a result, the division has been firmly
        upgrading and expanding two key businesses—Marubeni              establishing a leading position in the industry.
        International Commodities (Singapore) Pte. Ltd. and U            4. Pulp Marubeni owns a 50% stake in Daishowa-Marubeni
        Derivatives Pte. Ltd. As a network trader with its own up-       International Ltd. (DMI), which is ranked one of the top market
        stream and downstream business bases centered in Asia, the       pulp manufacturers in Canada. Marubeni has been marketing
        division works to expand worldwide transactions, particularly    all of the products produced by DMI. Sales volume since the
        in China, and thereby enhance profits.                           joint venture was established in 1971 has accumulated to more
        2. Footwear These operations cover all aspects of the footwear   than 8 million metric tons. Supported by a top-notch customer
        business, from product planning to retailing. Hong Kong-based    base as well as technical and sales capabilities cultivated over
        Marubeni Footwear Resources Limited plays a pivotal role in      many years, Marubeni, including DMI, sells 1.5 million metric
        sourcing overseas products and supplying them to major           tons of market pulp annually, corresponding to roughly 4% of




20   Marubeni Corporation 2003
Segment Assets                                                    Segment Net Income
( At March 31)                                                    ( Years ended March 31)



                                                    94
                                            1,8
                                       38                                                                     14
                                                                                                        8,0
                                           55
                                     1,7
                                33




                                                         40




                                                                                                                        10
                                      09




                                                          0,




                                                                                                                         ,0
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                                           30




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                                                                                                                                            Kazuoki Matsushita
                                                                                                                                            Corporate Vice President, COO



the market pulp share worldwide.                                                                               5. Wood chips As the top trading house in this field, handling
         The division set up Marubeni Paper Recycle Co., Ltd., to                                              around 30% of wood chips imported into Japan, the division
strengthen its capability to handle recycled paper, which ranks                                                develops new supply sources in South Africa, Southeast Asia,
alongside pulp as a raw material for making paper. Under-                                                      and Latin America. The division also secures its own afforesta-
neath Marubeni Paper Recycle, the division established Well                                                    tion resources in New Zealand and Australia through WA
Corporation, which operates recycled-paper yards, as a joint                                                   Plantation Resources Pty Ltd (Wapres), with the aim of
venture with Kokko K. K. In addition to recycling ordinary                                                     maintaining a stable supply of raw material wood chips for
paper, Well shreds confidential documents. In the coming                                                       papermaking in the future.
years, the division will emphasize production and trading to
expand its pulp business and generate stable profits.




  Business Topics                                                       WA Plantation Resources Pty Ltd                              Daishowa-Marubeni International Ltd.
                                                                        Located in the state of Western Australia,                   Marubeni and Daishowa Paper Mfg. Co., Ltd.,
                                                                        Wapres, through its wholly owned subsidiary                  established DMI as a joint venture in Canada in
                                                                        WACAP, has been making and exporting                         1969. Later, DMI teamed with Weldwood of
                                                                        papermaking-use wood chips for around 30 years.              Canada Ltd. to set up Cariboo Pulp & Paper Co.
                                                                        Marubeni acquired Wapres to gain access to that              Marubeni sells half of this plant’s annual output of
Unimac Rubber Company Limited                                           business in 2000, and the company is now jointly             340,000 metric tons.
Unimac Rubber was established in 1991 in Trang,                         operated with Nippon Paper Industries. Wapres                DMI expanded in 1992 with the acquisition of
Thailand, a natural-rubber producing region, as                         currently owns and manages around 30,000                     Peace River Pulp Mill. Marubeni sells all of this
part of the division’s upstream strategy to handle                      hectares of blue gum plantation trees. Each year,            plant’s annual output of 460,000 metric tons.
natural rubber. With production capacity of                             Wapres ships roughly 1 million metric tons of                Drawing on their ample timber resources and
roughly 50,000 metric tons annually, Unimac                             high-quality woodchips to Japan from Western                 technologies cultivated over many years, both
Rubber offers a stable supply of solid-form natural                     Australia’s Bunbury Port, thereby contributing to a          plants are among the most competitive in North
rubber and natural latex to tire makers, glove                          stable supply of raw materials for Japanese paper            America. Both produce 100% elemental chlorine
makers, and other users, who give the company’s                         manufacturers.                                               free pulp, earning them top reputations for quality
products high marks for quality.                                                                                                     among customers.




Unimac Rubber Company Limited                                           The blue gum nurseries of Wapres                             Daishowa-Marubeni International Ltd.




                                                                                                                                                               Marubeni Corporation 2003    21
                                                                                           Chemicals Division




        Strategy by Business Segment                                                          Specialty Chemicals Unit
                                                                                              Electronic Materials Unit
                                                                                              Inorganic Chemicals Unit
                                                                                              Agricultural Chemicals Unit
                                                                                              Basic Chemicals Unit
                                                                                              Plastics Planning Unit
                                                                                              Vinyl Alkali Unit
        Chemicals                                                                             Osaka Chemicals Unit
                                                                                              Chemix Project Unit
        Division                                                                              Plax Project Unit




        Message from the COO                                             Division Strategies and Strengths
        The Chemicals Division consists of 10 individual business        Swift technological innovation and the rapid commercial-
        units. The division’s products include commodity                 ization of new products constantly reshape the division’s
        chemicals, notably petrochemicals and plastics; inorganic        operations and profit structure. The division’s greatest
        chemicals, such as sulfur and salt; pharmaceuticals;             responsibility is to solidify its earnings base while
        agrochemicals; and a wide range of chemicals that apply          increasing shareholder value and customer profits by
        leading-edge technology, including specialty chemicals,          concentrating on fields of superior growth and earnings
        electronic materials, and biochemicals. Looking ahead, the       potential ahead of competitors.
        division plans to strengthen its competitive powers, mainly          The division focuses on three business areas. First, it
        in basic chemicals, electronic materials, and other areas that   enters areas offering definite demand and low market risk.
        demonstrate superior growth. As for the markets, the             Second, it explores fields with abundant growth possibili-
        division has positioned Asia, particularly China, as an          ties but limited market risk. Third, it handles businesses
        important market, aiming to solidify its earnings base. By       that Marubeni has prioritized before its rivals, and in which
        heavily allocating resources in these fields, the overriding     its expertise allows it to reap rewards as a pioneer and
        goal is to form a business portfolio that delivers superior      maximize synergies.
        performance on the dual fronts of trade and business and             To illustrate, the division positions China as a key
        that is well balanced in terms of geography, product lines,      market for electronic materials, due to rapid expansion in
        and business platforms.                                          manufacturing and demand. Accordingly, the division
                                                                         adjusts its business model to cater to the changes in the
                                                                         Chinese market and China’s relationship with the global
                                                                         market. Moreover, in the environmental field, the division
                                                                         set up a polyethylene terephthalate (PET) recycling and
                                                                         recycled sheet manufacturing business more than a decade
                                                                         ago. It has since established a solid position in this field.
                                                                             The division’s most valuable asset is its talented staff.
                                                                         They prize relationships and are extremely adept at
                                                                         perceiving and understanding the specific needs of business
                                                                         and trading partners. Moreover, they possess a wealth of
                                                                         ability to plan and create solutions to address these needs.




22   Marubeni Corporation 2003
Segment Assets                                                  Segment Net Income
( At March 31)                                                  ( Years ended March 31)



                                                                                                             03
                                                  67                                                   3,8
                                            0,3
                                    18
                                              2
                                   5    ,69
                                16
                                                                                            11




                                                       20




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                                                                                                                                       Ko Mori
                                                                                                                                       Corporate Vice President, COO




All divisional staff build diverse and multifaceted business                                                  Trading houses work best with partners that offer
relationships and personal networks through extensive                                                 specialized technologies and know-how. The interweaving
experience in Japan and abroad. The division also actively                                            of resources with those of partners yields greater mutual
localizes human resources to ensure that its networks are                                             synergies and better opportunities to maximize profit
closely in touch with local market conditions. For example,                                           structures than do independent efforts. The division strives
the division has established a company dedicated to sales                                             to select first-class business and trading partners to create
within China. This company is staffed with experts capable                                            strong and highly profitable business units in every field.
of proposing and executing optimal solutions for local
manufacturers and clients across a broad range of electronic
materials, including those used in cellular phones.




  Business Topics
  Business Topics                                                     Province) in May 2001 to produce printed circuit
                                                                      boards. Marubeni also established in July 2002
                                                                                                                               new drugs and are carrying out clinical trials
                                                                                                                               simultaneously in Japan, Europe, and the
                                                                      a business base in Shanghai dedicated to the             United States. To exploit this trend, Marubeni is
                                                                      handling of electronic materials. Marubeni aims to       setting up new businesses, particularly those
                                                                      use its existing CRT glass business in Shanghai          that utilize new technologies, including
                                                                      and its photoresist (optical resin) manufacturing        biotechnology, and facilitate the launch of new
Electronic materials business in China                                business in Suzhou to generate synergies not only        drugs globally. In addition to investing in
The electronics industry is shifting its production                   in the domestic Chinese market but also in               ventures that use new microarray technologies
bases to China at an accelerating pace. Amid this                     overseas markets.                                        (a method for batch analysis of a large number
development, Marubeni underscored its                                                                                          of genes) and that develop new cell-based drug
commitment to the production of semiconduc-                           Promotion of biochemical business                        screening systems, Marubeni has forged
tors, LCDs and mobile devices in this sector by                       Pharmaceutical companies are stepping up the             alliances with clinical trial companies with the
establishing a company (located in Wuxi, Jiangsu                      use of biotechnology in the development of               aim of supplying total solutions.




CMK Electronics (Wuxi) Co., Ltd. located in Wuxi,
China produces printed circuit boards.




                                                                                                                                                       Marubeni Corporation 2003   23
                                                                                            Energy Division


                                                                                              Oil and Gas E & P Unit
        Strategy by Business Segment                                                          Sakhalin Project Unit
                                                                                              LNG Unit
                                                                                              Energy Trading Unit
                                                                                              Petroleum Products Unit
                                                                                              Nuclear Power Unit
                                                                                              MIECO Unit
                                                                                              Sino Benny Unit
        Energy                                                                                Marubeni Energy Unit
                                                                                              Marubeni Ennex Unit
        Division                                                                              Utility Services Unit




        Message from the COO                                                  The division is also taking part in the Sakhalin I Project,
        This division strives to enhance Marubeni’s corporate value       an ambitious plan for developing the Russian Federation’s
        through its activities in the dynamic field of energy, with       oil-rich Sakhalin Island, through Sakhalin Oil and Gas
        the ultimate goal of increasing value for all stakeholders.       Development Co., Ltd. By 2005, this project aims to achieve
        Operations revolve around three key businesses areas:             a maximum production level of 250,000 barrels of crude oil
        energy resource exploration and production, trading, and          per day. Meanwhile in Qatar, the division’s liquefied
        marketing and retailing.                                          natural gas (LNG) production and sales operations are
             The energy industry is currently engulfed in a period of     proceeding apace, with plans underway to ramp up
        marked transition. To seize the opportunities emerging            production. This project will serve as the base for strength-
        from these profound changes in the business environment,          ening LNG operations.
        priority is being given to reallocating resources to busi-            In trading, long a core area of focus, the division is
        nesses with high return profiles relative to risk in each area.   primarily engaged in transactions involving crude oil and
        This will result in an optimally balanced business portfolio      petroleum products, mainly for Japan and other Asian
        and a stronger, more flexible earnings structure, contribut-      markets. The division has particularly distinguished itself in
        ing to achieving the goals of the “V” PLAN, Marubeni’s            the trade of naphtha, importing about 25% of this material
        current medium-term management plan.                              to Japan. Moreover, by leveraging risk management
                                                                          functions gained through years of business experience, the
        Division Strategies and Strengths                                 division plans to optimize ties between overseas branches
        Oil and gas E & P (exploration and production) is one of the      and group companies in its business network to supply
        division’s core businesses. The division acquired a 35.7%         competitive products in a more efficient manner.
        interest in a gas field located in the Gulf of Mexico in March        In terms of marketing and retailing, the division owns
        2003, in addition to the production assets its retains in U.K.    and operates in China’s Shenzhen region one of the
        waters in the North Sea and off the East Coast of India.          country’s largest liquefied petroleum gas (LPG) terminals.
        Looking forward, the division will make additional invest-        The division also deals in products from this facility. In
        ments in these areas to optimize output, while promoting          Japan, armed with a distribution infrastructure consisting of
        new investments and new development in Africa, the Middle         10 facilities for the storage of petroleum products and a
        East and other areas where the potential exists for high          network of 760 filling stations, the division is expanding
        returns. These actions are intended to boost Marubeni’s           downstream operations.
        worldwide daily production from its current 30,000 boed               The division also carries out a wide range of businesses
        (barrels of oil equivalent per day) to 50,000 boed by 2005.       in the field of nuclear energy. Services offered encompass the




24   Marubeni Corporation 2003
Segment Assets                                               Segment Net Income
( At March 31)                                               ( Years ended March 31)




                                         81                                                                   83
                                   8,9                                                                  8,3
                              31                3
                                            8
                                        1,4
                                   35
                                              38                                        65




                                                    40




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                                                                                                                                   Koichi Mochizuki
                                                                                                                                   Corporate Vice President, COO




entire nuclear fuel cycle business, from uranium ore procure-                                                 gas-to-liquid (GTL) fuels and dimethyl ether (DME). Both
ment, conversion, enrichment, fuel fabrication and recycling                                                  represent so-called “clean fuels” that reduce environmental
to related transport. The division is also engaged in the                                                     burden. These efforts to market environmentally friendly
import and export of various equipment for nuclear power                                                      fuels prove that even amid a challenging and rapidly
plants. In these businesses, the division deploys its high                                                    changing business environment, the Energy Division is
degree of specialization in providing value-added services.                                                   committed to encouraging the kind of creative solutions
          Where new business is concerned, the division is                                                    that give rise to successful new businesses.
currently working towards the commercialization of




  Business Topics                                                  The Qatar LNG Project                                            Sales of imported LPG in China
                                                                   Marubeni has been a partner in the Qatar LNG                     In 1995, Marubeni formed Shenzhen Sino-Benny
                                                                   Project, which saw its first LNG shipments begin                 LPG Co., Ltd. with local Chinese partners. This
                                                                   in 1997. Production and sales operations have                    move made possible for the first time the
                                                                   steadily grown since then, owing to long-term                    construction of an LPG storage terminal able to
                                                                   contracts with 5 power companies and 3 gas                       accommodate 40,000-ton refrigerated LPG
Purchase of gas production and                                     companies in Japan, which extend through 2021.                   tankers. The terminal has since thrived, providing
sharing rights in the Gulf of Mexico                               Moreover, the upgrade of facilities onsite is                    approximately 20%, or nearly 1 million metric
In March 2003, Marubeni acquired an interest in                    expected to increase annual production levels                    tons, of China’s imported LPG to Guangdong
the Fairway Gas Field, located in the Gulf of                      from the current 7.7 million metric tons to 9.2                  province. The terminal has also received high
Mexico off the coast of the U.S. state of Alabama.                 million metric tons by 2006, further extending the               marks from both local governmental organizations
The purchase was made through Marubeni Oil &                       operational scope of this project.                               and the LPG industry.
Gas (U.S.A.) Inc. The gas field is producing natural
gas on the order of 18,000 boed, of which
Marubeni’s share is 6,500 barrels, or 35.7%.




The Fairway Gas Field in Alabama state waters in                   Qatar LNG Project                                                Refrigerated LPG import terminal in Shenzhen, China
the Gulf of Mexico




                                                                                                                                                              Marubeni Corporation 2003   25
                                                                                            Metals &
                                                                                            Mineral Resources Division


        Strategy by Business Segment                                                           Iron Ore Unit
                                                                                               HBI Project Unit
                                                                                               Steel Making Raw Materials Unit
                                                                                               Coal Unit

        Metals &                                                                               Non-Ferrous Metals & Ores Unit
                                                                                               Precious Metals Unit
                                                                                               Light Metals Unit
        Mineral Resources                                                                      MMC Unit


        Division




        Message from the COO                                              chain integrator, the division seeks to move beyond the
        The division maintains a long-term perspective on its             distribution of individual products, the traditional function
        development of resources in upstream areas, from mine             of trading houses, gaining the ability to add increasing
        discovery and feasibility studies to commercial production.       amounts of value. To this end, the division is exploring
        The division is able to generate stable profits in its mid-       ways to better apply the assets at its command.
        stream commodity trade by trading in iron ore and coal, as            The “V” PLAN defines natural resources development as
        well as ingots of copper, zinc, aluminum and related raw          a core business. The division will thus give priority to
        materials. The division’s abilities to cover a diverse array of   investment in promising resource ventures, including
        fields, leverage midstream capabilities, and quickly antici-      expansion plans for aluminum smelting plant and coal mine
        pate changes in customer requirements, are fast becoming          development projects already underway. Meanwhile, the
        its defining characteristics, as is its skill in linking new      division plans to optimize its assets through the restructuring
        products, materials and technologies to promising and             or sale of less profitable businesses, with the goal of maxi-
        profitable downstream fields. With the exception of the fiscal    mizing earnings through investments that generate higher
        year ended March 31, 2002, which required write-offs              returns and greater asset values.
        associated with unrealized losses stemming from Marubeni’s            In downstream businesses, the division handles new
        bold “A” PLAN, the division has made consistent contribu-         commercially viable materials derived from its products in
        tions to the overall performance of the Marubeni Group since      upstream and midstream fields. One example is aluminum
        the division was organized in April 2000.                         disks, essential components in hard disk drives (HDD),
             The division strives to create a seamless interplay          manufactured by Toyo-Memory Technology Sdn. Bhd., a
        between its wide range of products and its diverse array of       joint venture established in Malaysia in 1998 with Toyo
        business skills. Going forward, plans will focus on achiev-       Kohan Co., Ltd. Toyo-Memory Technology boasts a monthly
        ing higher earnings by effectively implementing the “V”           production rate of 1.76 million disks, and continues to
        PLAN, Marubeni’s latest medium-term management plan.              operate at full capacity as of June 2003. In preparation for
                                                                          the next wave of technological innovation, the company is
        Division Strategies and Strengths                                 boosting the data storage capacity of its disks to 80 and
        Through the development of ore and coal mines, and                even 100 gigabytes (GB), and has undertaken R&D activities
        participation in smelting projects overseas, the division         to enable production of disks that meet the high standards
        secures its own supply of resources. At the same time, it         for quality that customers demand.
        maintains downstream businesses that harness metal                    Separately, the division has begun handling the interme-
        resources, notably electronic materials. The division thereby     diate materials used in the production of high-density
        aims to build a vertically integrated value chain covering        printed circuit boards. The Metals & Mineral Resources
        upstream and downstream areas. By becoming a value                Development Department, which was launched in April




26   Marubeni Corporation 2003
Segment Assets                                                    Segment Net Income
( At March 31)                                                    ( Years ended March 31)



                                                                                                                    3   8
                                            7   0                                                               2,7
                                        7,4
                                     20

                                       5   4
                                   7,7
                              17




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                                                                                                                                                           Tadatsugu Nakajima
                                                                                                                                                           Corporate Vice President, COO




2002, continues to assist the division in the setup and                                                                     On the organizational front, the thermal coal opera-
commercialization of promising new businesses and materi-                                                       tions formerly conducted by the Energy Division’s Thermal
als. Hopes are high that these activities will eventually result                                                Coal Department and by Marubeni Tetsugen Co., Ltd. have
in the construction of new earnings pillars for Marubeni.                                                       been unified under the Coal Department of the Metals &
Meanwhile, the Automobile Recycling Law, due to take effect                                                     Mineral Resources Division. Through this integration, the
in Japan from December 2004, is expected to present greater                                                     division seeks not only to maximize synergies arising from
business opportunities for the division’s ferrous and non-                                                      the joint use of supply sources and related information, but
ferrous metal scrap recycling business, allowing for a more                                                     to achieve an optimal divisional business portfolio.
substantial contribution to the sustainable development of a
recycling-oriented society.




  Business Topics                                                       Facilities expansion at aluminum                                     Expanding coal business in Australia
  Business Topics                                                       smelting joint venture in Canada                                     Marubeni is actively involved in four Australian
                                                                        Through Marubeni Metals and Minerals (Canada),                       coal mines (Macquarie, Jellinbah East, Coppabella
                                                                        Inc., Marubeni possesses a 6.67% stake in                            and German Creek East) through Marubeni Coal
                                                                        Aluminerie Alouette, an aluminum smelting project                    Pty. Ltd. The combined annual production of
Manufacture and sale of intermediate                                    in Quebec, Canada. Marubeni’s participation in this                  these mines is 11,000,000 metric tons, an
materials for high-density printed                                      project was finalized in September 2002, when the                    increase of nearly 10% over the past year. Coal
circuit boards in China                                                 decision was made to increase capacity at the site.                  produced from the mines is sold to steel
Marubeni and North Corporation, the developer                           As of June 2003, the project had an annual output                    manufacturers in Japan and other parts of the
of technology for the production of high-density                        of 240,000 metric tons. The completion of                            world. Moreover, Marubeni expects an increase in
printed circuit boards used in mobile phones                            additional facilities is expected to boost output to                 the total volume of coal it handles once full-scale
and other portable electronic devices,                                  550,000 metric tons, resulting in the largest project                operations commence at Hail Creek (annual
established NMBG (H.K.) Ltd. in September                               of its kind in the Western Hemisphere. Marubeni                      capacity of 5.5 million metric tons) and Moorvale
2001. NMBG has already begun test shipments                             handles approximately 420,000 metric tons of                         (annual capacity of 2.1 million metric tons), two
from the plant in Zhu Hai, Guangdong, China,                            annual aluminum ingot output, including 37,000                       cost-competitive open-cut mines, in mid-2003.
which has rapidly become a major market for                             metric tons at the Alouette project.
these products, with plans proceeding apace for
the start of full-scale operations in 2003.




Production of printed circuit boards                                    A designer’s rendition of the Alouette plant                         Hail Creek mine
                                                                        after the completion of expansion construction




                                                                                                                                                                      Marubeni Corporation 2003    27
                                                                                            Transportation &
                                                                                            Industrial Machinery Division

                                                                                              Aerospace & Defense System Unit
        Strategy by Business Segment                                                          Automotive & Construction Machinery
                                                                                                Retail Business Unit
                                                                                              Automotive & Construction Machinery Wholesale Unit
                                                                                              Automotive, Construction & Agro Machinery Unit

        Transportation &                                                                      Automotive & Construction Machinery Solution Unit
                                                                                              Production Machinery Unit
                                                                                              Industrial Machinery Unit
        Industrial Machinery                                                                  Industrial System Subsidiaries & Affiliates Unit
                                                                                              Digital Products Unit
        Division                                                                              Medical Business Unit




        Message from the COO                                              Division Strategies and Strengths
        The Transportation & Industrial Machinery Division has            In the fiscal year ended March 31, 2003, the division
        been reorganized into four business groups since April 2003       achieved net income of ¥3.6 billion on total assets of ¥292.6
        — the three existing groups of aerospace and defense              billion, because of more effective use of assets and the
        system, automotive and construction machinery, and                improved profits of our affiliates. In the fiscal year ending
        production and industrial machinery, as well as a new             March 31, 2004, the division will cultivate new customers,
        group — digital products and medical business. The                products, and businesses based on trust from and good
        division’s main business model is commodity trade,                relationships with customers in each of its four business
        including operation of sales affiliates, of machinery-related     groups, while maximizing the use of the division’s corpo-
        products in these four business groups.                           rate resources.
             Under this new organization, the division will maxi-             In the aerospace and defense system group, the
        mize free cash flow through improved selection in its             division will utilize its customer base cultivated from
        current portfolio of businesses and assets, and the cultiva-      investment in aircraft engines to promote domestic sales of
        tion of new products and businesses in promising business         regional passenger jets, European-made large helicopters,
        fields. These actions are in line with steps for attaining more   aircraft engines, and electronic instruments to private- and
        profitable assets laid out in the “V” PLAN.                       public-sector clients.
                                                                              In the automotive and construction machinery group,
                                                                          the division will strengthen its automotive wholesale and
                                                                          retail businesses in Europe and the United States while
                                                                          working to further improve returns on investment by
                                                                          replacing certain assets. Moreover, the division will
                                                                          strengthen its handling of a broad range of construction,
                                                                          mining, and agricultural machinery destined for use in
                                                                          natural resource and agricultural development projects in
                                                                          the Middle East, North Africa, Asia, and the Confederation
                                                                          of Independent States (CIS).




28   Marubeni Corporation 2003
Segment Assets                                                          Segment Net Income
( At March 31)                                                          ( Years ended March 31)




                                                         78
                                                   7,0
                                              44

                                                                                                         9)
                                         31                                                        ,48                0)         67
                                   9,1                                                       (10                 25        3,5
                                                                                                              (6,




                                                               50




                                                                                                                                       5,
                              32




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                                                                                                                                         0
                                                     40
                                    81




                                                                                                                           0
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                                                                                                                                                              Michio Kuwahara
                                                                                                                                                              Corporate Vice President, COO




         In the production and industrial machinery group, the                                                             promote and cultivate new products and projects that
division will promote domestic sales and exports of                                                                        contribute to the preservation of the natural environment,
bundled hardware and software for automobile production                                                                    including the reduction of CO2 emissions.
machinery and pulp and paper manufacturing equipment                                                                                  In the digital products and medical business group, the
to meet needs and requests from overseas and domestic                                                                      division will create new business and projects that make
customers. The division will also create proprietary func-                                                                 full use of the Internet in accordance with the growing use
tions and added value as part of efforts to roll out new                                                                   of broadband networks and services, the integration of PCs
products and new business models in the nanotechnology                                                                     with home electronics, and the convergence of broadcasting
and high-technology fields. In the fields of industrial waste                                                              and telecommunications.
recycling and new energy development, the division will




  Business Topics                                                             Sales of regional passenger jets                                         Soda recovery boiler and power plant
  Business Topics                                                             (170 and 190 Series)                                                     for Hokuetsu Paper Mills, Ltd.
                                                                              Marubeni became a sales agent in Japan for 170                           Marubeni received an order for a soda recovery
                                                                              and 190 series regional passenger jets made by                           boiler that burns biomass black liquor fuel,
                                                                              Empresa Brasileira de Aeronautica S.A. (Embraer).                        a by-product produced in the chemical pulping
Large export order for construction                                           The 170 series jet seats 70 - 86 passengers, while                       process, and an 85-megawatt steam turbine
machinery from Myanmar                                                        the 190 series seats 96 - 116 passengers. To                             power generator from Hokuetsu Paper Mills, Ltd.
Marubeni received an order worth ¥2 billion                                   date, approximately 350 of the jets have been                            for its Niigata Mill. The main equipment will be
from the Irrigation Department, Ministry of                                   ordered worldwide, and Marubeni is now                                   manufactured by Kawasaki Heavy Industries, Ltd.,
Agriculture and Irrigation, the Union of Myanmar, for                         marketing these jets in Japan.                                           and should be completed in October 2004. The
133 units of equipment, consisting of trucks and                                                                                                       equipment will have the largest capacity of its
construction machinery. This equipment will be                                                                                                         kind in Japan, burning 2,900 metric tons of black
used mainly for construction of a dam that will                                                                                                        liquor per day.
supply water for irrigating farmland. Komatsu, Ltd.
and other Japanese manufacturers will be the
suppliers, with delivery starting in spring 2003.




Komatsu construction equipment                                                Regional passenger jet manufactured by Embraer                           Graphic of a soda recovery boiler and
                                                                              of Brazil                                                                85-megawatt steam turbine generator




                                                                                                                                                                                 Marubeni Corporation 2003   29
                                                                                                    Utility & Infrastructure Division




        Strategy by Business Segment                                                                  Overseas Power Project Unit-I
                                                                                                      Overseas Power Project Unit-II
                                                                                                      Domestic Power Project Unit
                                                                                                      New Energy Business Unit

        Utility &                                                                                     Environment Infrastructure Unit
                                                                                                      Overseas Asset Management Unit
                                                                                                      Railway & Transport Project Unit
        Infrastructure
        Division




        Message from the COO                                                     with a solid track record and a strong position within the
        The Utility & Infrastructure Division aims to expand its presence        industry. To date, the division has completed EPC projects with
        in the transportation and environment sectors, as well as in the         an aggregate capacity of 65,500 megawatts, and has secured
        power business, including the overseas independent power                 power generation assets with a gross capacity of 5,000 mega-
        producer (IPP) business, one of the key areas for the entire             watts. In the fiscal year ending March 31, 2004, the division will
        company as outlined in the “V” PLAN. Based on these ambi-                set up a holding company to manage its power generation
        tions, the division seeks to establish itself in a leading position in   assets. The logic behind this move is that it enables the division
        the comprehensive infrastructure business in Japan and abroad.           to optimally manage assets and maximize profits.
        The main themes in the pursuit of this target are the diversified            Railway & transport projects focus on exportation of
        and efficient procurement of funds necessary for the overseas            equipment and offshore trade of transportation-related EPC
        IPP business and growing earnings therefrom. In addition, the            projects and infrastructure schemes, such as for railways,
        division will deploy corporate resources in markets where it             airports, ports and harbors, bridges, and roads.
        excels in overseas engineering-procurement-construction (EPC)            The division is traditionally strong in large, full turnkey deals
        projects and the transportation sector. It is also essential that the    as a prime contractor. The division pursues not only publicly
        division responds quickly and adequately to business opportuni-          funded projects but also privately funded complex projects
        ties presented by the deregulation of and changes to laws                with maintenance and operation components by offering a
        pertaining to retail sales of electric power, and the new energy and     competitive contract scheme to its clients.
        environment fields in Japan.                                             The division is working more closely with partners in Japan
                                                                                 and abroad that offer technological clout and superb cost-
        Division Strategies and Strengths                                        competitiveness to conclude contracts and propose systems
        The division’s core operational area covers the overseas power           and businesses that best match client requirements.
        business (IPP and EPC), followed by transportation projects.                 In domestic power business concerns, the division in July
        The division is aiming to further broaden the scale of such              2002 took advantage of industry deregulation to utilize the
        operations and enhance profit growth in the same areas.                  Mibugawa hydro power station owned and operated by
             In the near future, the division will position the domestic         Marubeni to retail electricity under the service area of Chubu
        electric power business and environmental infrastructure                 Electric Power Co., Inc. The division also began similar operations
        projects as core businesses with significant growth potential. In        in April 2003 under the service area of Tokyo Electric Power Co.,
        the fiscal year ended March 31, 2003, overseas power opera-              Inc., utilizing surplus power from other industries.
        tions and transportation projects accounted for nearly all of                In 2004, deregulation will be extended to users demanding
        divisional net income. In the future, however, the division will         high-voltage power, fostering further growth in the retail power
        focus on generating higher profits from domestic power                   business. Moreover, the division is pushing ahead with sales of
        operations and environmental infrastructure projects as well.            wind power and fuel cells, reflecting renewable portfolio
             Overseas power operations take place under a business               standards (RPS). In March 2003, the division started operating a
        model attuned to shifting trends in the electric power industry,         wind power plant in Nejime, Kagoshima Prefecture, bringing its
        based on expertise and know-how accumulated in the EPC                   total capacity from wind power to 32 megawatts. Meanwhile,
        arena over many years. These efforts have provided the division          sales of molten carbonate fuel cells produced by U.S.-based



30   Marubeni Corporation 2003
Segment Assets                                                    Segment Net Income
( At March 31)                                                    ( Years ended March 31)




                                          23
                                    8,6
                               19
                                               07
                                         2,8
                                21                                                               4)         60          08
                                                    97                                      52        1,9
                                              2,1                                     (3,                         4,5




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                                                                                                                                                    Mamoru Sekiyama
                                                                                                                                                    Corporate Vice President, COO



FuelCell Energy, Inc. are getting on track, with operation of the                                                Jenets Co., Ltd. as cooperative ventures with France-based
first domestic unit beginning in April 2003.                                                                     Veolia Group for the operation and maintenance of local
         In the area of environmental infrastructure, the develop-                                               government water treatment and waste management facilities.
ment of potable water, wastewater treatment, and waste                                                           Overseas, the division is involved in an 18-year build-operate-
management projects has assumed a more prominent position                                                        transfer (BOT) water treatment plant project with Veolia Water
in business activities. This shift comes amid growing global                                                     S.A. in Chengdu, China, while in Mexico, a wastewater
concern for the natural environmental, as well as ongoing                                                        recycling business is being run with Ondeo-Degremont S.A., a
deregulation, allowing the private sector to take a more active                                                  French company. Going forward, the division plans to actively
role in public works projects. Actions on the domestic front will                                                participate in a broader range of environmental projects along
include the establishment of Nippon Utilities Management and                                                     these lines.


                                                                        Renovation project for the Astana
  Business Topics                                                       Airport in Kazakhstan
                                                                                                                                       neighboring town of Sata is underway.
                                                                                                                                       After completion of phase II in the first half of 2004,

  Business Topics                                                       Marubeni has formed an international consortium to
                                                                        extend the runway and expand and renovate the
                                                                                                                                       these wind farms will have a combined capacity of 26
                                                                                                                                       megawatts, and constitute the largest class wind
                                                                        aprons and taxiways of Astana International Airport in         power station in western Japan.
                                                                        Kazakhstan. The Marubeni-led consortium will also
Bang Bo combined cycle power plant in                                   construct a new passenger terminal, new cargo                  Shuweihat Water Transmission
Thailand                                                                terminal, and a new flight-control tower, as well as the       scheme in UAE
The Bang Bo combined cycle power plant is a 350                         flight-safety facilities. The renovation work is scheduled     In July 2002, Marubeni received an order worth
megawatt dual-fired (natural gas and oil) power plant                   for completion in 2005 and is aimed at meeting the             approximately ¥100 billion for the Shuweihat Water
located in the Samut Prakarn Province of Thailand.                                                             expected rise in        Transmission scheme from the Abu Dhabi Water &
Eastern Power and Electric Company Limited is the                                                              demand for              Electricity Authority of the United Arab Emirates.
plant owner, with a 28% stake by Marubeni. The                                                                 international air       The project involves the construction of 480 kilometers
plant began operations in March 2003, and will                                                                 transportation in       of water pipeline to transmit 450,000 metric tons/day of
supply power to the Electricity and Generating                                                                 Kazakhstan and          desalinated water produced at the Shuweihat
Authority of Thailand under a long-term contract of                                                            ensuring air traffic    Desalination Plant, located 250 kilometers west of Abu
                                                                        Designer’s rendition of the            safety.                 Dhabi, to the suburbs of the city. The project also
20 years.
                                                                        Astana Airport in Kazakhstan
                                                                                                                                       entails the construction of two pumping stations. The
                                                                                                                                       contractual completion of the project is November 2004.
                                                                        Operation of Minami Osumi Wind Farms
                                                                        in Japan
                                                                        A wind power station located in the town of Nejime,
                                                                        Kagoshima Prefecture, began commercial operation
                                                                        on March 1, 2003. As phase I of the ongoing project,
                                                                                                         the facility has total
                                                                                                         power capacity of
                                                                                                         13 megawatts.
                                                                                                         Phase II construc-
                                                                                                         tion of a station
                                                                                                         with the same
                                                                                                         capacity near the
Bang Bo combined cycle power plant in Thailand                          A wind power station located in the                            Laying of water pipelines during construction of the Shuweihat
                                                                        town of Nejime, Kagoshima Prefecture                           Water Transmission scheme in the UAE




                                                                                                                                                                     Marubeni Corporation 2003          31
                                                                                          Plant & Ship Division




        Strategy by Business Segment                                                        Industrial Plant Unit
                                                                                            Energy & Chemical Project Unit
                                                                                            Ship Unit
                                                                                            Asset Management Unit
                                                                                            Musi Pulp Project Unit
                                                                                            CAPC Project Unit
                                                                                            Tekmatex Business Unit
        Plant & Ship                                                                        Protechs Business Unit


        Division




        Message from the COO                                           Division Strategies and Strengths
        The important role of the division is the comprehensive        This division has a total of eight units, comprising five
        coordination of oil and gas-related projects and industrial    business units and three other units specializing in the
        plants mainly for overseas markets, covering every phase       management of assets and the execution of important projects.
        from feasibility studies to completion and operation of            In the plant business, the division has shifted from a
        projects. The division is also involved in the trading,        finance-dependent business to EPC businesses by increas-
        operating and chartering of vessels. The division has          ing the proportion of projects that use export credit agency
        combined its experiences and know-how cultivated over the      frameworks. The division’s new business model extensively
        years in these fields, as well as its diverse functions of     incorporates elements of risk management.
        financial arrangement and execution of Engineering                 In industrial plants, these changes resulted in receiving
        Procurement and Construction (EPC) contracts, with             of orders, mainly in steel and cement fields, from countries
        Marubeni’s global business network. This has enabled the       in which the division is traditionally successful, namely
        division to provide solution services tailored to the chang-   Brazil, China, and Turkey.
        ing business environment and evolving customer needs.              In energy and chemical projects, the division achieved
             The division, by deepening its experience, knowledge      notable success, particularly in oil and gas-related projects,
        and capabilities, is staunchly committed to leveraging the     in oil and gas-producing regions such as Africa, the CIS, the
        comprehensive functions of a trading company to provide        Middle East, South America and China. The ship business
        optimal solutions to customers; and we believe it is our       aggressively pursued trading of various types of new and
        solid intention to contribute to the economic development      secondhand vessels and chartering, receiving orders for
        of the countries where our operations are exposed.             transactions involving over 30 new vessels as a result.
                                                                           Through these efforts, the division concluded contracts
                                                                       totaling ¥1.1 trillion in the fiscal year ended March 31, 2003,
                                                                       a record high. As for the Chandra Asri project in Indonesia,
                                                                       a financial restructuring has taken effect in August 2002
                                                                       after extended negotiations.




32   Marubeni Corporation 2003
Segment Assets                                                                 Segment Net Income
( At March 31)                                                                 ( Years ended March 31)



                                                                 58
                                                           3,6
                                                      57                                                                                2)
                                                                                                                                  ,00
                                                                                                                            (14
                                                                                                                                                       7
                                            87                                                                                                 1,2
                                                                                                                                                   7
                                      2,2




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                                                                                                                                                                                     Tsuyoshi Endo
                                                                                                                                                                                     Corporate Vice President, COO




          The division’s core strength is its mutual relationship of                                                                         resources in markets and business sectors where the
trust with customers and leading contractors in Japan and                                                                                    division has a long record of accomplishments, to promote
overseas, backed by an extensive track record in the plant                                                                                   projects by identifying latent customer needs, (2) integrat-
and ship businesses. The division’s capabilities encompass                                                                                   ing and maximizing the value of diverse trading house
sophisticated know-how and expertise in finance, and skill                                                                                   functions in order to meet customer needs more flexibly,
in minimizing risk in the execution of projects, which have                                                                                  and (3) enhancing the economic returns from existing
been derived from its experience in handling numerous                                                                                        invested projects.
orders and contracts in these areas. Going forward, the
division plans to further broaden, strengthen and improve
its capabilities, with the aim of: (1) concentrating corporate




  Business Topics                                                                    Companhia Siderurgica De Tubarao
                                                                                     (Brazil) places order for 75-megawatt
                                                                                                                                                                   Construction of container ship for
                                                                                                                                                                   Evergreen Group of Taiwan completed
                                                                                     thermal power station and LD gas                                              Construction of a 6,400 TEU** container ship for
                                                                                     recovery system                                                               the Evergreen Group of Taiwan was completed in
                                                                                     Marubeni received full turnkey construction                                   January 2003 at the Kobe Shipyard and Marine
                                                                                     orders from Companhia Siderurgica De Tubarao,                                 Works of Mitsubishi Heavy Industries, Ltd.
Crude oil shuttle tanker business                                                    Brazil’s largest steelmaker (located in the State                             Delivery of the vessel to the Evergreen Group by
In August 2002, Marubeni concluded a contract                                        of Espirito Santo) for a 75-megawatt thermal                                  Marubeni and Mitsubishi Heavy marks the 38th
with Transpetro S.A. (Rio de Janeiro) to charter                                     power station (boiler/turbine generator) and an                               ship Marubeni has delivered this year. By
two shuttle tankers for the transportation of crude                                  LD gas recovery system to fuel the new power                                  augmenting its fleet, the Evergreen Group has
oil. Transpetro is a 100% subsidiary of Petrobras,                                   station. Plant will be handled jointly by Mitsubishi                          improved customer service by achieving greater
the national oil company of Brazil. The chartered                                    Heavy Industries, Ltd., and Kawasaki Heavy                                    logistics speed and efficiency. Moreover, it has
vessels (Suezmax, 153,000dwt*) are owned by a                                        Industries, Ltd. The new facilities will enable                               further cemented its position among the leaders
lease SPC established by Marubeni. This marks                                        Companhia Siderurgica De Tubarao to meet                                      in the container transport industry.
the first time that Transpetro has procured tankers                                  100% of its power needs internally.
                                                                                                                                                                   **TEU: Twenty-foot Equivalent Unit
from outside the Petrobras Group.

*dwt: deadweight tonnage




Crude oil shuttle tanker                                                             Tubarao Steelworks                                                            Container ship of the Evergreen Group




                                                                                                                                                                                               Marubeni Corporation 2003   33
                                                                                             Development &
                                                                                             Construction Division


        Strategy by Business Segment                                                           Tokyo Housing Development Unit-I
                                                                                               Tokyo Housing Development Unit-II
                                                                                               Construction Business Unit
                                                                                               Urban Development Unit

        Development &                                                                          Real Estate Business Unit-I
                                                                                               Real Estate Business Unit-II
                                                                                               Osaka Housing Development Unit
        Construction                                                                           Housing Supporting Business Unit
                                                                                               Overseas Housing Development Unit
        Division                                                                               Estate Management Unit




        Message from the COO                                               operating companies in the housing business. Meanwhile,
        The Development & Construction Division operates within a          four units operate and manage the division’s 30-plus
        project solution service business model. The condominium           companies, working together to promote restructuring
        business is the division’s core source of earnings. To date, the   within the division. These units strive to strengthen the
        division has supplied some 60,000 family-oriented condo-           division as a whole by pursuing greater selectivity and
        miniums nationwide, consisting mainly of those in its Famille      focus in its business portfolio.
        series. The division aims to further expand earnings by                The condominium business will remain the main
        focusing on urban condominiums that cater to a broad range         earnings pillar. The condominium sales ratio has been
        of homebuyers. In operating areas outside of housing, the          decreasing because of the deflationary trend of recent years.
        division will expand its commercial property sublease              Still, medium- and long-term demand for urban condomini-
        business and its real estate fund business, thereby enhancing      ums should remain strong. Accordingly, the condominium
        and cultivating new earnings sources. These activities             business, centered on urban areas, will remain a profit base
        revolve around maximization of profit after tax less risk asset    going forward.
        cost (PATRAC), Marubeni’s chief administrative index.                  From April 2003, the division established within the
                                                                           head office a new housing technology and service depart-
        Division Strategies and Strengths                                  ment to field inquiries and complaints from people who
        From April 2003, the division was reorganized into 10              have purchased a condominium. Consistent with the
        business units, six of which are targeted for future growth        company’s increased emphasis on compliance, the depart-
        and expansion. Three of these units collectively promote the       ment operates based on the policy of maintaining a direct
        development of condominiums in Japan. There is also a              channel of communication with customers and implement-
        newly established Urban Development Unit specializing in           ing swift and detailed solutions.
        areas outside of domestic housing. The Overseas Housing                The division also operates a business involved in the
        Development Unit is in charge of the division’s housing and        lease of residential properties to expatriates living in China
        condominium business in the rapidly growing Shanghai               for over a decade. Recently, the division’s housing and
        market. Finally, the Housing Support Business Unit com-            condominium project in Shanghai, which has been at the
        prises Marubeni Real Estate Sales Co., Ltd. (sales) and            center of the rapid growth in China’s economy, has been
        Benny Estate Service Co., Ltd. (property management), key          performing well. Consequently, the division is considering
                                                                           the establishment of a new condominium project there.
                                                                               Moreover, the division plans to establish the domestic
                                                                           non-housing field, including leasing, subleasing, and real
                                                                           estate funds, as a stable operating base and a second
                                                                           earnings pillar during the term of the “V” PLAN. The




34   Marubeni Corporation 2003
Segment Assets                                                       Segment Net Income
( At March 31)                                                       ( Years ended March 31)



                                                                                                                                      1)
                                                                                                                                 38
                                              0    4                                                                       (5,
                                          6,3
                                     42
                                              84
                                        8,4                                                                                          5)
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                                                                                                                                                            Norihiro Shimizu
                                                                                                                                                            Corporate Vice President, COO




division had operated this business in parallel with the                                                                   potential, including Tipness Co., Ltd., a fitness club chain
marketing department of the condominium business, but                                                                      that is operated as a joint venture with Suntory Ltd., and
from April 2003, it set up the new Urban Development Unit                                                                  Tsunagu Network Communications, Inc., which promotes
to specialize in the non-housing field. Specifically, the goal                                                             greater use of IT technology in condominiums and is
is to bolster fee-based businesses through steps such as                                                                   operated in partnership with Mitsubishi Estate Co., Ltd.
roughly doubling the amount of assets under management                                                                     and Tokyo Tatemono Co., Ltd. Both Tsunagu Network
in the division’s real estate funds.                                                                                       Communications and Tipness are expected to demonstrate
         The Urban Development Unit comprises a group of                                                                   rapid growth going forward.
diverse operating companies with significant growth




  Business Topics                                                          BLEU CLAIR marks the fourth complex in the                            Housing project in Shanghai
                                                                           Nihonbashi series supplied since September                            Marubeni has sold all of the units in its 928-unit
                                                                           1998. The latest complex is located in Tokyo’s                        Sakura Garden project in Shanghai, China. The
                                                                           Nihonbashi district, an area close to Ohtemachi—                      company commenced sales of 454 units for the
                                                                           the heart of the city’s business district—and                         first phase of a low-rise condominium project,
                                                                           Tokyo Station. Designed (both interior and                            called Phoenix City (which will eventually have
Famille Nihonbashi BLEU CLAIR                                              exterior) by a French designer who has handled                        1,600 units), in August 2002 and quickly sold all of
Famille Nihonbashi BLEU CLAIR (Chuo-ku, Tokyo)                             projects around the world, the Famille Nihonbashi                     them. To meet surging demand for housing in
is a 13-story, 90-unit condominium complex that                            BLEU CLAIR offers hotel-like common spaces                            Shanghai, Marubeni plans to market more units in
offers a variety of floor plans, from one-room                             and a host of detailed amenities.                                     stages, having begun sales of around 400 units in
efficiencies to four-bedroom units. Nihonbashi                                                                                                   the second round of phase I in spring 2003 and
                                                                                                                                                                       starting sales of roughly 300
                                                                                                                                                                       units in the first round of
                                                                                                                                                                       phase II in autumn 2003.
                                                                                                                                                                       In addition, a new project is in
                                                                                                                                                                       the planning stages.
                                                                                                                                                                       Marubeni’s real estate
                                                                                                                                                                       management affiliate in
                                                                                                                                                                       Shanghai will manage the
                                                                                                                                                                       units. Thus, Marubeni is
                                                                                                                                                                       contributing to the improve-
                                                                                                                                                                       ment of the housing
                                                                                                                                                                       environment for the residents
                                                                                                                                                                       of Shanghai in two
                                                                                                                                                                       respects—development and
                                                                                                                                                                       property management.


Famille Nihonbashi BLEU CLAIR                                              View of Sakura Garden in Shanghai, China




                                                                                                                                                                           Marubeni Corporation 2003      35
                                                                                         Finance & Logistics
                                                                                         Business Division


        Strategy by Business Segment                                                       Finance Business Unit
                                                                                           Insurance Business Unit
                                                                                           Treasury & Trading Unit
                                                                                           Logistics Business Unit

        Finance &
        Logistics Business
        Division




        Message from the COO                                           Division Strategies and Strengths
        This division provides services in finance, insurance,         The division is made up of four units: Finance Business,
        foreign currency trading and logistics, with a level of        Insurance Business, Treasury & Trading and Logistics
        expertise made possible through years of practical experi-     Business. By maximizing synergies between these units and
        ence in each of these four fields. These services are a        the other operating divisions, we bring to the fore the full
        defining aspect of Marubeni as a general trading house and     value and strengths of Marubeni.
        constitute a core competence. We aim to offer high value-          In the field of finance, we offer services that combine
        added services by developing and refining these critical       the collective strengths of the company with sophisticated
        skills, taking them beyond the traditional realm of services   financial schemes. When setting up, managing and selling
        offered in support of the trading activities of operating      management buy-in, venture capital, and real estate funds,
        divisions. Indeed, we are wedding financial, logistics and     we are able to draw on an extensive network of partner
        information technologies to create new business models         companies and our expertise in incubating businesses. And
        and, in the process, new ways to generate earnings.            by capitalizing on in-depth knowledge and experience in
                                                                       portfolio management, we can develop and manage new
                                                                       types of investment products.
                                                                           In the insurance field, we act as an agent and as a
                                                                       broker. Our services extend beyond life and non-life
                                                                       insurance policies for individual and corporate clients to
                                                                       include trade credit insurance, which is in increasing
                                                                       demand in Japan. Furthermore, we are broadening our
                                                                       horizons by exploring the feasibility of entering new
                                                                       markets that do not fall within the domains of the life or
                                                                       non-life insurance sectors. Notable examples are nursing
                                                                       care and disability income insurance, two so-called “third-
                                                                       sector” insurance products. Moreover, weather derivatives,
                                                                       corporate pension funds and other areas on the fringe of the
                                                                       insurance industry also harbor potential as future busi-
                                                                       nesses for the division.
                                                                           In foreign currency trading, a traditional area of
                                                                       expertise for Marubeni as a trading house, we offer services
                                                                       of the highest quality to customers via other operating
                                                                       divisions. By extending these services while enhancing risk




36   Marubeni Corporation 2003
Segment Assets                                                    Segment Net Income
( At March 31)                                                    ( Years ended March 31)




                                                    54
                                              0,3
                                         34
                                                                                                        44




                                                         40




                                                                                                               4,
                                                                                                  3,3




                                                                                                                00
                                                          0,
                                                          00




                                                                                                                 0
                                                30




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                                                              0




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                                                    0,
                           04                                                 7




                                                    00




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                                20




                                                                                            2,
                                                     0
               16




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                                 0,
                                 00




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                    10




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                                                                                                                                  Hitoshi Sakamoto
                                                                                                                                  Corporate Vice President, COO




management skills, we are attempting to generate higher                                                 solutions that address client needs in Japan and overseas.
earnings in this field. In addition to foreign currency                                                 Overseas, we operate a container terminal business that has
trading, the division is actively structuring and selling                                               no peer in the trading house sector.
hedge funds that use our operational knowledge of finan-                                                     Regarding new investments, we are channeling re-
cial markets, including money and equity markets.                                                       sources into business domains that offer the best opportuni-
         The fourth business domain of the division, logistics                                          ties to capitalize on our strengths and the most attractive
services, is a mainstay business in which we are very much                                              risk-return profiles. With existing projects, the division looks
at home as a trading company. Sophisticated international                                               to strengthen its balance sheet by realigning its asset
logistics services have been a prime focus of this division,                                            portfolio. This includes seeking capital gains from asset
but we have been expanding our capabilities here, too. With                                             sales. To optimize resource allocation and earnings, the
the ability to offer supply chain management (SCM), third-                                              division will take on the challenge of building dynamic, new
party logistics and other solutions in conjunction with                                                 business models by leveraging its creativity and agility to
  Business Topics
logistics services, we are a one-stop source of logistics                                               seize opportunities.



                                                                        Expanding logistics operations
  Business Topics                                                       Eastern Sea Laem Chabang Terminal Co., Ltd.
                                                                                                                               one of the leading players in terms of containers
                                                                                                                               handled at the port, contributing to the develop-
                                                                        runs a container terminal business at Thailand’s       ment of Thai industry and its economy. This
                                                                        Laem Chabang port. In calendar 2002, this              company’s pedigree is underscored by a top
                                                                        company handled approximately 520,000 TEUs             ranking in service quality at the Asian Freight
                                                                        (20-foot-equivalent units). It consistently ranks as   Industry Awards.
Corporate acquisition funds
In the 1990s, Marubeni made forward-looking
investments in corporate management buy-in and
buy-out funds. Today, it has an impressive track
record in Japan and is reaping the benefits of
those investments. Building on these successes,
the division is stepping up efforts to expand
profits by beginning to invest in funds created to
rehabilitate struggling companies.




                                                                        Eastern Sea Laem Chabang Terminal




                                                                                                                                                        Marubeni Corporation 2003   37
                                                                                            Telecom & Information Division




        Strategy by Business Segment                                                          Vectant Unit
                                                                                              Nexion Unit
                                                                                              Solution Service Unit
                                                                                              Project Management Unit

        Telecom &                                                                             Enterprise Sales Unit
                                                                                              Overseas Telecom & Information Unit

        Information
        Division




        Message from the COO                                              Division Strategies and Strengths
        The Telecom & Information Division has been implement-            In the fiscal year ended March 31, 2003, the division
        ing the following strategies since the fiscal year under          concentrated its corporate resources in the following three
        review. First, the division is constructing business bases and    fields: (1) product distribution, including PCs and mobile
        carrying out powerful sales activities in the field of solution   phones; (2) solutions and services for IT network systems;
        services, including system integration for enterprises in         and (3) infrastructure utilization, including optical fiber
        Japan and overseas. Second, it is effectively utilizing the       telecommunication lines. The division did not meet its goal
        prominent telecommunication infrastructure owned by the           of higher sales for the Vectant Group, which utilizes its own
        Marubeni Group. The division continues to seek profit             telecommunication infrastructure to offer services, because
        growth revolving around the video transmission services           of slumping IT investments by enterprises in Japan and
        offered by Nexion Corporation and a broad range of                abroad and lower sales of PCs and other IT equipment,
        telecommunication services using the optical fiber network        owing to the worsening economic environment. On the
        of Global Access Ltd. (GAL) in Japan. The division is also        other hand, the mobile phone business was steady and
        pushing ahead with efforts to create a strong business            overseas telecommunication contracts were firm, under-
        presence based on the policies of creating new ventures and       pinned by healthy orders from Costa Rica and Algeria.
        cultivating future earnings sources.                                  In April 2003, the division made a fresh start as a unit
                                                                          that pursues a business incubation-oriented business model,
                                                                          with a focus on the aforementioned solutions and services
                                                                          and the infrastructure related business. IT investments by
                                                                          Japanese enterprises totaled ¥25 trillion in 2002, and it is
                                                                          expected to reach ¥30 trillion in 2006 despite slower growth
                                                                          as a result of the economic downturn. Even under these
                                                                          circumstances, the division should experience greater
                                                                          domestic demand for system integration and IT solutions,
                                                                          as it is in the business of helping enterprises improve
                                                                          operating efficiency and reduce costs. In this field, the
                                                                          division provides solutions to enterprises, academic/
                                                                          research institutions, and government agencies. These
                                                                          solutions combine products and services offered by Group
                                                                          companies, including Marubeni Solutions Corporation and
                                                                          Marubeni Information Systems Co., Ltd., as well as those of
                                                                          business partners like Hitachi Ltd. and Hewlett-Packard




38   Marubeni Corporation 2003
Segment Assets                                                                       Segment Net Income
( At March 31)                                                                       ( Years ended March 31)



                                                                                                                                                      6)
                                                                                                                                                 52
                                                                                                                                              (3,
                                             8   2
                                         3,3
                                    30
                                                                                                                                                              0)
                                     65                                                                                                                  99
                                                                                                                                                     (7,
                               3,3




                                                                40




                                                                                                                                                                   0
                          26




                                                                 0,
’01                                                                                  ’01                                  7)




                                                                  00
                                    03                                                                              ,64




                                                     30




                                                                                                                                                (1
                              5,1




                                                                     0
                                                                                                              (35




                                                                                                                                                 0,
                                                      0,
                         24




                                                                                                                                                 00
                                                      00
’02                                                                                  ’02
                                20




                                                                                                                                    (2




                                                                                                                                                     0)
                                                          0




                                                                                                                                    0,
                                    0,




                                                                                                                                     00
                                    00



’03                                                                                   ’03
                 10




                                                                                                                      (3




                                                                                                                                         0)
                                     0




                                                                                                                      0,
                    0
                   ,0




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                    00
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                                                                                                                                                                                Shuichi Morizane
                                                                                                                                                                                Corporate Vice President, COO




Japan Ltd., thereby providing the division with even greater                                                                                    Moreover, Nexion started full-scale video transmission services in
capabilities in new product/service development and sales.                                                                                      April 2002, and order flow has been steady. In addition to further
In addition to using its bases in Tokyo, Osaka, Nagoya, and                                                                                     strengthening its operations, Nexion plans to enter the digital
Fukuoka to deliver solutions throughout Japan, the division                                                                                     terrestrial broadcasting business in December 2003 with test
offers the same services to Japanese companies overseas.                                                                                        broadcasts in several regions across Japan, with the goal of
         In the telecommunication infrastructure field, the                                                                                     being a pioneer in this field.
division sells access to the Vectant Group’s independently                                                                                                    By entering and expanding its presence in these new
constructed optical fiber network linking Tokyo, Nagoya, Osaka,                                                                                 businesses, the division aims to bolster its earnings and
and Fukuoka. The division aims to build a strong business by                                                                                    emerge as a strong player in the IT industry.
approaching users that require high-speed, broadband lines.




  Business Topics                                                                             services using its data-center buildings (Com                                   dedicated to transmitting high-quality, large-
                                                                                              Space) in Tokyo’s Nihonbashi and East Shinjuku                                  capacity video content. Nexion uses cutting-edge
                                                                                              areas. The company uses its own network, built                                  video content transmission facilities and achieves
                                                                                              to meet the individual needs of constituent users,                              interconnection with satellite earth stations in
                                                                                              to offer a business platform for the new age of                                 every country in the world to offer a broad lineup
                                                                                              broadband communications to telecom carriers,                                   of services tailored to customer needs, whether
Global Access Ltd.                                                                            Internet service providers, government agencies,                                for high-definition television (HDTV) or for
GAL is a Type I communication carrier that offers                                             and large enterprises.                                                          standard-definition television sets. By delivering a
high-speed, broadband telecommunication                                                                                                                                       variety of advanced-quality video image services,
services over its own optical fiber network within                                            Nexion Corporation                                                              mainly news and sports, to media markets around
Japan. In addition to Wave Length, SDH/SONET,                                                 Nexion is a broadband company that provides                                     the world, Nexion contributes to the advance-
and Ethernet dedicated line services and dark                                                 video transmission services from various locations                              ment of next-generation digital broadcasting.
fiber services, GAL offers housing and co-location                                            abroad via its own global optical fiber network


    GAL Network
                                                                           TOKYO

                 KJCN
                                                      NAGOYA

                                                                                                        JUSCN

      FUKUOKA                                OSAKA
                                                                              TOKYO               APCN- 2
                                                               NAGOYA         CITY RING
                                          OSAKA
                                          CITY RING            CITY RING
                                                                                                   PC-1

                                                                                              EAC

                                                                                      JUSCN
                                                                              APCN- 2

                                                 EAC
                                                                       PC-1
                                                                JUSCN


                                                                                                                                Nexion provides video transmission services




                                                                                                                                                                                                       Marubeni Corporation 2003     39
        Strategy by Business Segment




        Business Incubation                                             Strategies and Business Model
                                                                        for Business Incubation

        Department
                                                                                                    •Investment
                                                                             Venture
                                                                                                    •Management assistance
                                                                                                    •Overseas expansion, etc.




                                                                                                                                      Marubeni
                                                                               Growth


        Business Outline
        Marubeni established the Business Incubation Department
                                                                            Profitable            •Earn intellectual property
        in April 2001 to create new businesses beyond the traditional       Company               •Sole sales agency
                                                                                                  •Capital gains
        divisional framework. The department is developing
        innovative business models that will become a part of
        Marubeni’s core business in three to five years. The depart-      •Develop intellectual property business, in addition to the product itself.
                                                                          •Hands-on-support:
        ment is putting focus on newly advanced technologies such          •Raise the value of the invested company by assisting its management.
                                                                           •Invest in early-stage ventures as well as mid- to late-stage businesses.
        as biotechnology and nanotechnology, as well as on new
        markets and expanding industries such as healthcare.

        Strategies                                                      Achievements
        1. Access and assess deal-flows through invested funds:         In the fiscal year ended March 31, 2003, the Business
        Discover and invest in promising new business seeds by          Incubation Department invested in five projects. Having
        establishing a strategic alliance with Japanese, U.S. and       made investments in nine projects in the previous fiscal year,
        European biotechnology, nanotechnology and healthcare funds.    the department’s investments in this two-year span total
        The deal-flows are evaluated by the department’s own criteria   about ¥2.4 billion. As the first phase of the department’s
        and through technical screening from retained consultants.      business, two trading projects were also launched in the
        2. Provide solutions:                                           fiscal year ended March 31, 2003. In all cases, the growth
        Invest in and provide all necessary solutions to promising      potential and originality of the patents and know-how that
        venture companies to increase their value. Examples of          the partners possessed were thoroughly assessed for creation
        assistance include establishing the company, organizing         of the most suitable business model.
        management, promoting sales and entering overseas/
        Japanese markets.                                               Biotechnology
        3. Expected returns:                                            • In this field, the department has found promising venture
        Obtain patent usage and exclusive sales rights as returns by      companies and has been incubating new businesses.
        providing these solutions. Expect capital gains from initial      Investment targets are mainly in the fields of drug candidate
        public offerings or dividends and at the same time generate       substances and related screening tools, and applied
        revenues and earnings from regular trading operations.            technology in the medical field, namely biomedicine, an area
             The department also aims to commercialize not only the       which includes immunology and regenerative medicine.
        products but also the intellectual property by leveraging the   • In order to efficiently identify significant investment targets
        accumulated expertise of a trading house. The department          and create business opportunities in Japan, the department
        will utilize Marubeni’s global network and maintain close         has invested in biotechnology-related venture funds in
        ties with other divisions to carry out these plans.               Europe and the United States. Additionally, in December



40   Marubeni Corporation 2003
  2002, Marubeni and Marubeni America Corporation                  Marubeni is the largest investor from the private sector in
  invested $1.5 million in the Caduceus Private Fund-II, a         this fund. The department has also invested in the
  U.S.-based bio-venture fund. At the same time, the depart-       company that manages the fund. By doing so, the depart-
  ment created a unique system that encompasses all phases         ment is able to maintain close ties with the fund, and
  of the incubation process, from discovering promising            acquire access to emerging projects as well as to profes-
  opportunities to creating and fostering businesses.              sional technological assessments of nanotechnology.
  The department accomplished this by forming strategic
  partnerships with consultants to screen and assess technol-    Healthcare
  ogy and its marketability in two stages, support licensing/    • The department will introduce advanced technologies from

  in-licensing, provide information services via the Internet,     Europe and the United States in medical treatment, nursing

  formulate new business models and create added value.            care service, health improvement, and other growing fields

• The department has newly invested directly in two                by establishing strategic alliances with companies in different

  Japanese venture companies. One is Osteogenesis Inc.,            fields to construct new business models in these areas.

  which is developing technology to regenerate alveolar          • In fiscal 2001, the department invested in Coty Co., Ltd.,

  bone and other bones. The other is the Institute of Gene         which primarily manages childcare centers in Sapporo, in

  and Brain Science, which develops treatments for spinal          order to enter the childcare market. In addition,

  cord injuries. The department will assist both companies         the department partnered with Nagase & Co., Ltd.,

  by introducing their technology to potential business            Iwatani International Corporation, and Nichido Fire &

  partners and supporting their forays into U.S. markets.          Marine Insurance Co., Ltd. to enter the home oxygen

• The department has formed an alliance with Columbia              therapy business, and is aiming to establish a joint venture

  University to provide funds for research to identify and         in this area. Moreover, the department will utilize

  validate novel anti-neurodegenerative drugs, including           infrastructure, such as the network of medical institutions

  drugs for the treatment of Alzheimer’s disease.                  and patients created by this partnership, to lay the

  The department is considering the creation of a university       foundation for new businesses and the introduction of

  technology fund centered on technologies and ventures            innovative home medical treatment products, such as

  originating from Columbia University and other                   ultra-lightweight portable oxygen units.

  universities in the United States and Europe.
                                                                 New Technologies
                                                                 • The targets in this area are critical technologies capable of
                                                                   transforming existing business sectors and industry
                                                                   structures, particularly in the medical, telecommunications,
                                                                   and environmental service fields.
                                                                 • In the fiscal year ended March 31, 2002, the department
                                                                   established a joint venture company with Given Imaging,
                                                                   Ltd., a NASDAQ-listed manufacturer of capsule endoscopes.
                                                                   Clinical trials for approval are proceeding smoothly.
                                                                 • The department delivered electrolyzed water and water
                                                                   purification systems to Yamashita Corporation, a leading
Nanotechnology                                                     company in the rental nursing care products business,
• In nanotechnology, which encompasses a broad spectrum            in a move that has received an
  of potential applications, the department has identified         overwhelming response from
  nanomaterials and nanoelectronics as its strategic fields,       the industry. The department is
  and is making progress in finding such technologies and          also working to create other
  venture companies.                                               electrolyzed water-related
• In order to swiftly identify promising businesses,               businesses, including healthcare
  Marubeni has invested ¥300 million in the Critical Tech-         products and soil remediation.
  nology Fund, which is Japan’s first nanotechnology fund.




                                                                                                             Marubeni Corporation 2003   41
        Risk Management



        “V” PLAN, the current medium-term management plan,                 Group assets, which is the principal reason for adopting
        strongly emphasizes the notion that better risk management         more sophisticated risk management methods. The stated
        is a key objective for the Marubeni Group, since it paves the      goal of the “V” PLAN is to reduce total consolidated risk
        way to the generation of increased corporate value through         assets to ¥580 billion or less by the end of March 2006. In
        the development of an asset base of higher quality.                this context, risk assets can be thought of as the total
             Marubeni has traditionally approached risk manage-            amount of equity capital that needs to be set aside as a
        ment on a project-by-project basis, with the result that the       provision for potential losses on all Marubeni Group assets.
        risk-return performance of the company was related to an           The goal is to increase shareholders’ equity by the end of
        aggregate of many individual management decisions. This            the period covered by the “V” PLAN (March 2006) to a level
        approach had the disadvantage that it did not provide              close to the value of total risk assets.
        adequate control over risk diversification, one of the basic            Besides being designated as one of the key business
        tenets of risk management. This in turn resulted in overexpo-      performance indices, risk assets also form the basis for the
        sure to certain areas, occasionally leading to large and           calculation of PATRAC (Profits After Tax less Risk Assets
        unexpected losses. To avoid any recurrence of such problems,       Cost)*, an important internal financial indicator that was
        Marubeni is now shifting to a portfolio-based integrated risk      developed by Marubeni to aid in the evaluation of the
        management system that measures the overall risk associated        performance of portfolio units and consolidated subsidiaries.
        with total Group assets. This helps to ensure that there is no     To raise PATRAC, each portfolio unit or consolidated
        excessive concentration of risk associated with any particular     subsidiary must reduce its existing risk assets, minimize
        country, industry or customer.                                     them through new business development, or boost returns.

        Integrated Risk Management and                                     Future Challenges
        Measurement of Risk                                                Integrated risk management is carried out mainly by staff at
        The portfolio management approach depends on producing             Marubeni head office, principally in the Risk Management
        quantitative measurements of the risk associated with total        Department and the Corporate Planning & Coordination
        business assets. This is done by first categorizing all Marubeni   Department. These groups analyze and compile data on risk
        Group assets in terms of country, industry, customer credit        assets and perform the PATRAC calculations, which are
        rating, and account type. Numerical methods are then applied       then reported to management.
        to derive a common measure of risk to all assets irrespective of        Looking to the future, Marubeni believes that maximizing
        category, which is known as Value at Risk (VaR). This quanti-      the results of risk management practices and generating growth
        fies the risk by determining the maximum potential loss in         in consolidated corporate value depend critically on developing
        asset value, taking into account the possible effects of risk      an effective combination of the portfolio management and
        diversification and correlational factors. Marubeni has also       traditional risk-aggregation approaches to ensure that Marubeni
        developed its own computational analysis systems that use          Group assets are managed in the most appropriate and timely
        computer simulations to make precise and detailed risk             manner. By means of individual project risk analysis and proper
        quantifications. This method allows multiple risk factors to be    actions for asset preservation and risk-avoidance, strong
        integrated to give a single monetary value for risk – hence the    individual assets can be developed. The key mission for
        name, integrated risk management.                                  management is to keep a close eye on the risk-return profiles of
                                                                           all assets so that risk is equally and healthily diversified across
        Risk Assets
                                                                           the entire business portfolio. To use a forestry analogy, the idea
        The “V” PLAN uses the amount of “risk assets” determined
                                                                           is to help each individual tree grow properly while also
        by integrated risk management calculations as a key
                                                                           watching the whole forest to stop trees from growing too close
        component of performance and management indices. The
                                                                           to each other or from becoming diseased.
        core aim of the plan is to improve the quality of Marubeni
                                                                           * PATRAC = Net income – (Risk assets x 8%)
                                                                             The performance benchmark is a positive PATRAC value.




42   Marubeni Corporation 2003
Compliance



Companies self-evidently need to pursue profits to promote         The base of the Japanese edition of the manual provides
their continued existence in the interests of consumers,       compliance training tips aimed at all Marubeni employees in
suppliers, shareholders, employees and other stakeholders.     Japan. At Marubeni Group firms, the company is constructing
Yet, if such pursuits do not result in sound business          compliance systems that are tailored to the different products
practices, no value is ultimately added. More than ever        and trading arrangements unique to each operation. It is our
before, companies today must establish compliance struc-       desire to shape Marubeni into a “credibility-oriented, reliable
tures to ensure that corporate behavior is ethical and         business group.”
complies with relevant laws and regulations.                       Separately, Marubeni has established a compliance
    Marubeni has worked to establish effective internal        access point dubbed the “Door of Courage.” This advisory
control systems and structures to promote regulatory           channel provides any director or employee within the
compliance and corporate ethics within the Marubeni            Marubeni Group with the means to report any compliance
Group. On April 24, 2002, the company established a            violations directly to the central compliance committee, or
Compliance Committee to strengthen existing controls.          else to discuss them with an external legal counsel that can
Reporting directly to the president, this committee oversees   provide advice on the issue. Naturally, any reporters of
the implementation of various measures designed to boost       compliance violations receive assurances they will not be
compliance and promote ethics.                                 penalized for such actions.


Corporate Compliance Manual and                                Expansion of Stringent Compliance
the “Door of Courage”                                          Measures
Marubeni has formulated and distributed a compliance           The “V” PLAN, the current medium-term management
manual, which is designed to act as a guide to the required    plan that commenced from April 2003, designates the
standards of corporate behavior for all directors and          strengthening of existing regulatory compliance struc-
employees in the performance of daily duties. The manual       tures, including all Marubeni Group companies, as one of
commits all who work within the Marubeni Group not only        the most important issues facing the company. In specific
to uphold the law, but also to promote the highest standards   terms, besides providing for more related training and
of ethical corporate behavior as members of society. The       education programs to cultivate a strongly compliance-
opening sentence of the manual sets forth a clear, uncom-      oriented corporate culture among all individual staff, the
promising principle to inspire all employees to make ethical   plan calls for the construction of separate compliance
choices, even when under pressure: “When you are faced         structures within all business divisions and Marubeni
with a choice between integrity and profit, choose integrity   Group companies. Centered on a system of compliance
without hesitation.”                                           officers appointed in each business area, these new
                                                               structures aim to reflect the differences that exist between
                                                               various areas and industries. The plan also substantially
                                                               boosts the effectiveness of internal controls by instituting
                                                               systems of compliance audits, by increasing the numbers
                                                               of internal audit personnel, and by strengthening the
                                                               audit functions inside Marubeni Group companies. In the
                                                               future, Marubeni plans to continue seeking improve-
                                                               ments to its compliance systems in a sure and steady
                                                               fashion, since this is not a task that should be rushed.




                                                                                                           Marubeni Corporation 2003    43
                                                                                                                                       43
        Our Commitment to Sustainable Growth



        Integrated Environmental Management System                       has translated into its recognition in leading world equity
        As a major trading house with operations that span the           markets as an eco-stock. The company has been selected for
        globe, the Marubeni Group is introducing environmental           two consecutive years as a stock for a Japanese equity
        management systems based on ISO 14001 guidelines                 eco-fund by the Japan Research Institute Limited, which was
        worldwide. The goal is to reduce the environmental impact        commissioned by a leading European financial institution to
        of Marubeni’s many diverse businesses and to work actively       advise on the selection of companies that are actively
        toward the development of eco-conscious business models.         committed to environmental conservation. Marubeni also
             An integrated environmental management system with          remains a listing on the Dow Jones World Sustainability
        common global standards is being applied across the entire       Index, a benchmark indicator that comprises corporations
        Marubeni Group to promote a unified certification process.       deemed to be staunch contributors to sustainable growth and
        Marubeni has developed a global environmental policy to          to sustainability in the economic, environmental and social
        raise awareness of environmental responsibilities among all      spheres. Again, this marked the second consecutive year of
        directors and employees, and is undertaking a variety of         index inclusion. In addition, Marubeni has been included in
        initiatives to develop an integrated response to the challenge   the new FTSE 4 Good Index, an equity market benchmark
        of environmental impact reduction. As of March 31, 2003, the     designed jointly by the Financial Times newspaper and the
        Tokyo and Osaka head offices, domestic branches and offices,     London Stock Exchange to guide investors toward firms that
        and a total of five overseas corporate subsidiaries and 31       take social responsibilities as a corporate citizen seriously.
        affiliates had gained ISO 14001 certification. The worldwide     These various achievements provide a positive, objective
        certification process continues.                                 evaluation of the efforts that the Marubeni Group is making
             As part of a policy initiative to strengthen compliance     with regard to the environment and to the development of
        structures within the Marubeni Group, the company has            constructive relationships with all stakeholders.
        issued a compliance manual to all staff. This manual
        stresses the importance of observance of environmental           Development of Eco-Businesses
        conservation laws and regulations, and of taking measures        The Marubeni Group Environmental Policy commits the

        to reduce the impact of business activities on the               company to promote eco-consciousness within daily business

        environment and natural ecosystems.                              activities and to develop businesses that provide positive
                                                                         environmental benefits. Marubeni is leveraging its capabili-
                                                                         ties as a general trading house to contribute to environmental
                                                                         conservation projects across a wide range of business fields.
                                                                         Examples include wind power generation projects, PET
                                                                         bottle recycling operations, and participation in an
                                                                         environmental fund organized by the European Bank of
                                                                         Reconstruction and Development. A description of the
                                                                         Marubeni Group Environmental Policy and examples of
                                                                         eco-conscious business activities can be found in the Environ-
                                                                         mental Report and on the company’s website.
        Greater Transparency and Disclosure
        Marubeni is striving to raise transparency in relation to its        In line with the Marubeni Group Environmental Policy,
        environmental activities to promote deeper mutual                the company is aware of its responsibilities as a good
        understanding with all its external stakeholders. Efforts to     corporate citizen. In all its daily business activities,
        promote transparency include the publication of an annual        Marubeni will continue to do its utmost to preserve the
        environmental report, disclosure of environmental                environmental well-being of the Earth, while striving for
        information on its website, and a system for answering           the harmony and prosperity of human society. Marubeni is
        related external inquiries.                                      committed to continue working for a better environment
             Marubeni’s commitment in the environmental sphere           and sustainable growth.




44   Marubeni Corporation 2003
Corporate Citizenship



The Marubeni Foundation                                                    Its consistently high level of donations to the commu-
Marubeni recognizes its social responsibilities as a                 nity over nearly three decades have gained the Marubeni
corporate citizen. One of the main ways in which Marubeni            Foundation a high reputation among Japan’s private-sector
has contributed to society over many years is through the            philanthropic organizations. In March 2003, in recognition
Marubeni Foundation, which was established in 1974 and               of its contributions to society, the Japan Fashion Associa-
has been authorized as a social welfare corporation by               tion, a member of the Japan-Tokyo Chamber of Commerce,
Japan’s Ministry of Health, Labour and Welfare. The                  presented the foundation with the Japan Lifestyle &
Marubeni Foundation is involved in a variety of social               Culture Award.
welfare activities. It disburses over ¥100 million in funds
every year to social welfare institutions and related bodies
throughout Japan for many different projects, in response to
requests submitted through a transparent application
process. Since 1975 the foundation has consistently
supported over 50 projects each year. Over the past 28
years, a cumulative total of ¥2.8 billion has been distributed
to nearly 1,500 groups.
    Recipient institutions and bodies, which include groups
working in each of Japan’s 47 administrative regions, range
from homes for the elderly and physically and mentally
challenged people, to children’s institutions and welfare-
related volunteer groups. Fund disbursements typically cover         Tohru Tsuji, former Chairman of the Marubeni Foundation, at the award ceremony

the costs of building facilities or purchasing special vehicles or
other equipment. The contributions are also used for housing         Academic Scholarships
and other building renovation projects, and for surveys and          Marubeni has established academic scholarship funds in the
similar research projects in welfare-related fields. Recently,       Philippines (1989), Vietnam (1994) and Indonesia (1999) to
the foundation has also made numerous donations to institu-          support local education and training. Marubeni finances
tions and groups that tackle important contemporary social           these funds, which disburse scholarships out of investment
issues such as truancy, domestic violence and homelessness.          returns. In the Philippines, the fund provides scholarships
In these diverse ways, the Marubeni Foundation supports a            for students on vocational training courses, whereas in
broad range of worthy social causes.                                 Indonesia the fund supports university students. In the
    Despite declining returns on investments due to low              fiscal year ended March 31, 2003, these funds supported a
interest rates in recent years, the foundation has worked to         total of 233 students across the three nations.
develop extra sources of donations so that the level of
annual disbursements can be maintained at ¥100 million.              Other Activities
One such initiative is the ¥100 Club, which now counts               As part of regional community initiatives, Marubeni has
over 4,000 volunteers from among Marubeni directors,                 organized semiannual cleanup drives in the vicinity of its
employees and retirees.                                              Tokyo head office in conjunction with local residents. The
                                                                     company also organizes collections of second-hand clothing
                                                                     from employees to send to refugees overseas.




                                                                                                                             Marubeni Corporation 2003    45
                                                                                                                                                         45
        Directors, Corporate Auditors and Corporate Vice Presidents



        MEMBERS OF THE BOARD                                       CORPORATE AUDITORS

        Chairman                                                   Inoshin Kitamura                                           Hitoshi Sakamoto
                                                                   Toshihiko Mori                                             Chief Operating Officer, Finance & Logistics Business Div.;
        Tohru Tsuji
                                                                                                                              Executive Corporate Officer, Business Incubation Dept.
                                                                   Hiroaki Shinoda
        President and CEO                                          Tatechika Umeda                                            Teruo Asada
                                                                                                                              General Manager, Finance Dept.;
        Nobuo Katsumata                                                                                                       Senior Corporate Officer, Investor Relations

                                                                   CORPORATE                                                  Michio Kuwahara
        Executive Deputy Presidents
                                                                   VICE PRESIDENTS                                            Chief Operating Officer, Transportation & Industrial
        Katsuo Koh                                                                                                            Machinery Div.
        Advisor to the President for Iron & Steel Strategies and
        Coordination Dept.; Executive Corporate Officer,           Corporate Executive Vice President                         Mamoru Sekiyama
        Iron & Steel Strategies and Coordination Dept.
                                                                   Kazuhiko Sakamoto                                          Chief Operating Officer, Utility & Infrastructure Div.
                                                                   General Manager for the Americas; President and CEO,
        Shigeki Kuwahara                                           Marubeni America Corporation                               Koichi Mochizuki
        Executive Corporate Officer, Corporate Strategies Dept.;                                                              Chief Operating Officer, Energy Div.
        Advisor to the President for Energy Div.,
        and Metals & Mineral Resources Div.                        Corporate Senior Vice Presidents
                                                                                                                              Masaru Funai
                                                                   Kiyoshi Yoshimitsu                                         General Manager, Corporate Planning & Coordination Dept.
        Corporate Executive Vice Presidents                        Chief Executive for Europe & Africa;
                                                                   Managing Director and CEO, Marubeni Europe plc             Toru Nishimi
        Toshio Nakagawa
                                                                                                                              Deputy General Manager for the Americas;
        CIO; Advisor to the President for Transportation &
                                                                   Masakatsu Takita                                           Executive Vice President and COO, Marubeni America
        Industrial Machinery Div., Telecom & Information Div.,
                                                                   Chief Representative in Indonesia; President and CEO,      Corporation; President and CEO, Marubeni Canada Ltd.
        and Business Incubation Dept.
                                                                   P.T. Marubeni Indonesia

        Yuji Kato                                                                                                             Tadao Manabe
                                                                                                                              General Manager for China; President, Marubeni
        Executive Corporate Officer, Audit Dept., Information      Corporate Vice Presidents
                                                                                                                              China Co., Ltd.; General Manager, Beijing Office
        Strategy Dept., Risk Management Dept., and Legal Dept.
                                                                   Tadatsugu Nakajima
                                                                   Chief Operating Officer, Metals & Mineral Resources Div.   Hiroshi Koyabu
        Corporate Senior Vice Presidents                                                                                      Chief Operating Officer, Textile Div.

        Akira Matsuda                                              Ko Mori
        Advisor to the President for Utility & Infrastructure
                                                                   Chief Operating Officer, Chemicals Div.                    Tetsuro Sakamoto
        Div., Plant & Ship Div., and Finance & Logistics                                                                      Chief Operating Officer, Agri-Marine Products Div.
        Business Div.                                              Shuzo Yamada
                                                                   General Manager, Nagoya Branch                             Tsuyoshi Endo
        Makoto Isogai                                                                                                         Chief Operating Officer, Plant & Ship Div.
        Advisor to the President for Forest Products & General     Shuichi Morizane
        Merchandise Div., Chemicals Div., and Development &        Chief Operating Officer, Telecom & Information Div.        Norihiro Shimizu
        Construction Div.                                                                                                     Chief Operating Officer, Development & Construction Div.
                                                                   Makoto Itoh
        Kazuo Ogawa                                                President, Marubeni Thailand Co., Ltd.;
        Executive Corporate Officer, Human Resources Dept.,                                                                                                (As of September 1, 2003)
                                                                   General Manager, Bangkok Branch
        Corporate Communications Dept., and Corporate
        Planning & Coordination Dept.
                                                                   Kazuoki Matsushita
                                                                   Chief Operating Officer, Forest Products & General
        Tomoyuki Nakayama                                          Merchandise Div.
        Advisor to the President for Agri-Marine Products Div.,
        and Textile Div.
                                                                   Fumio Uehara
                                                                   President & CEO, Nexion Corporation
        Susumu Watanabe
        Executive Corporate Officer, General Affairs Dept.,
        Corporate Accounting Dept., Finance Dept.
        and Investor Relations




46   Marubeni Corporation 2003
Financial Section




48_Eleven-Year Summary
50_Financial Review
58_Consolidated Balance Sheets
60_Consolidated Statements of Operations
61_Consolidated Statements of Changes in
     Shareholders’ Equity
62_Consolidated Statements of Cash Flows
63_Notes to Consolidated Financial Statements
83_Report of Independent Auditors




                                 Marubeni Corporation 2003   47
         Eleven-Year Summary
         Marubeni Corporation
         Years ended March 31


                                                                                                                          Thousands of
                                                                                                        Millions of Yen   U.S. Dollars*
                                                                                                             2003             2003          2002              2001

        For the year:
          Trading transactions
            Domestic .............................................................................        ¥2,928,999      $24,408,325     ¥3,232,883     ¥3,754,652
            Export ..................................................................................      1,101,830        9,181,917      1,209,677      1,184,653
            Import .................................................................................       1,477,899       12,315,825      1,519,451      1,760,793
            Offshore ..............................................................................        3,284,575       27,371,458      3,010,234      2,736,765
          Total volume of trading transactions .................................                           8,793,303       73,277,525      8,972,245      9,436,863

           Gross trading profit ..............................................................               424,643        3,538,692       436,804           479,754
           Income (loss) before income taxes and equity in
            earnings (losses) of affiliated companies .........................                               33,166          276,383       (165,155)           6,688
           Net income (loss) ..................................................................               30,312          252,600       (116,418)          15,036

        At year-end:
          Total assets .............................................................................       4,321,482       36,012,350      4,805,669      5,320,604
          Net interest-bearing debt .....................................................                  2,264,117       18,867,642      2,712,906      3,089,839
          Total shareholders’ equity ...................................................                     260,051        2,167,092        263,895        342,297

        Amounts per 100 shares (¥/US$):
         Basic earnings (loss) ..............................................................                   2,030            16.92        (7,792)           1,006
         Diluted earnings (loss) .........................................................                      1,896            15.80        (7,792)             940
         Cash dividends ......................................................................                    300             2.50             –                –

        Cash Flows (for the year):
         Net cash provided by (used in) operating activities ........                                        194,788        1,623,233        198,456        179,305
         Net cash provided by (used in) investing activities ........                                        113,241          943,675         74,504        187,993
         Net cash (used in) provided by financing activities ........                                       (294,001)      (2,450,008)      (150,104)      (456,125)
         Cash and cash equivalents at end of year .........................                                  466,511        3,887,592        466,642        329,811

        Ratios:
         Return on assets (%) .............................................................                       0.7                              –                 0.3
         Return on equity (%) ............................................................                       11.6                              –                 4.5
         Shareholders’ equity to total assets (%) .............................                                   6.0                            5.5                 6.4
         Net D/E ratio (times) ...........................................................                        8.7                           10.3                 9.0

        Consolidation:
         Consolidated subsidiaries ...................................................                              327                            354               412
         Equity-method affiliates ......................................................                            157                            161               186
         Total ......................................................................................               484                            515               598

        Number of employees:
         Consolidated ..........................................................................              24,829                         28,140            30,956
         Non-consolidated .................................................................                    3,914                          4,234             4,855

        Stock price (Tokyo Stock Exchange) (¥):
          High ......................................................................................               151                            262               401
          Low ......................................................................................                 86                             58               200
        * U.S. dollar amounts above and elsewhere in this report are converted from yen, for convenience only, at the prevailing rate of ¥120 to US$1 as of
          March 31, 2003.




48   Marubeni Corporation 2003
                                       Millions of Yen
  2000             1999             1998             1997             1996            1995            1994               1993




¥ 4,571,183     ¥ 5,183,131      ¥ 5,931,831     ¥ 6,604,469       ¥ 6,967,511     ¥ 6,741,379     ¥ 7,020,640       ¥ 7,469,459
  1,250,165       2,163,734        2,535,228       2,190,089         1,976,749       2,058,938       2,247,539         2,600,561
  1,425,294       1,452,026        1,710,749       1,727,032         1,531,517       1,619,055       1,775,125         2,396,812
  2,975,800       3,161,266        3,462,709       3,448,387         3,064,783       2,449,590       2,300,504         2,990,595
 10,222,442      11,960,157       13,640,517      13,969,977        13,540,560      12,868,962      13,343,808        15,457,427

   453,496         522,356          534,485              496,550      475,221         460,167         451,596            458,193

      5,419        (149,904)         54,922               57,504       33,900          14,572          36,104              37,146
      2,060        (117,729)         17,230               20,113       15,117          10,368           5,493               1,108


  5,584,353       6,511,841        7,388,101        7,550,347        7,644,002       6,844,022       7,059,389         8,067,086
  3,328,437       3,966,471        4,432,159        4,555,208        4,403,714       4,079,368       3,932,907         4,620,051
    324,301         354,017          475,253          512,929          560,589         480,451         438,810           452,873


         138         (7,880)           1,153               1,346         1,012               694             368                 74
         138         (7,880)           1,054               1,289         1,010               694             368                 74
           –            300              600                 600           600               600             600                600


    184,701         232,414         254,221            24,308          107,547         (99,929)        227,959           (241,545)
    257,006          99,101         (58,769)           66,036         (252,345)       (158,296)        436,054            (75,819)
   (594,878)       (213,321)        (91,879)         (209,412)         267,217          (4,188)       (772,509)          (124,646)
    405,308         579,366         480,825           373,015          485,844         359,436         642,575            785,127


          0.0                –             0.2               0.3             0.2             0.2             0.1              0.0
          0.6                –             3.5               3.8             2.9             2.3             1.2              0.2
          5.8              5.4             6.4               6.8             7.3             7.0             6.2              5.6
         10.3             11.2             9.3               8.9             7.9             8.5             9.0             10.2


         456              488              479              459              436             410             422                464
         190              201              214              203              188             164             157                175
         646              689              693              662              624             574             579                639


    31,342                –                –                   –             –               –               –                  –
     5,344            5,844            6,041               6,386         6,702           7,064           7,190              7,218


         486              345              525              638              602             580             545                490
         205              155              177              421              404             415             410                309




                                                                                                             Marubeni Corporation 2003   49
        Financial Review



        1. OPERATING ENVIRONMENT                                              out. The Bank of Japan continued its quantitative easing policy in
                                                                              the face of ongoing deflation, but this failed to increase lending
        During the year under review, ended March 31, 2003, the U.S.          on the part of financial institutions. The Nikkei 225 Stock
        economy witnessed capital investment pick up slowly, but              Average at the end of March 2003 actually hit a 21-year low, and
        consumer spending made moderate gains in the first half of 2002       was representative of the continuing difficulties and instability
        thanks to low interest rates and a positive wealth effect sup-        faced by capital markets.
        ported by high housing prices. However, the second half of the
        fiscal year was adversely influenced by falling stock prices and a    2. OVERVIEW OF
        delayed recovery in unemployment rates, both brought on by a             FISCAL YEAR ENDED MARCH 31, 2003
        series of highly publicized accounting irregularities at major
        corporations and weak corporate profits. As a result, business        Total Volume of Trading Transactions
        and consumer sentiment worsened and economic recovery                 Marubeni recorded a total volume of trading transactions of
        slowed. This situation was exacerbated in the early months of         ¥8,793.3 billion (US$73,278 million) on a consolidated basis,
        2003 by increasing tension in Iraq. The result was that businesses    ¥178.9 billion, or 2%, lower than the previous fiscal year. The
        and households reined in spending, slowing economic growth.           total volume of trading transactions includes the sales value of
           In Europe, mandatory fiscal constraints by countries having        all transactions in which Marubeni and its subsidiaries partici-
        already adopted the euro prevented the adoption of proactive          pate, irrespective of the type of transaction, based on the
        economic policies. Germany and other European countries               practices of Japanese trading companies.
        suffered stock market slumps and layoffs as a result. Predictably,
        consumer spending fell and as a consequence domestic demand           By Transaction Type
        within Europe stagnated. Overall growth rates failed to improve       Domestic transactions were down ¥303.9 billion, or 9.4%, at
        significantly from the low figures of the previous year.              ¥2,929.0 billion mainly due to declines in Metals and Machinery.
           In Asia, exports and domestic demand made significant gains        Exports declined ¥107.8 billion, or 8.9%, to ¥1,101.8 billion
        in South Korea, Thailand and Malaysia, driving robust economic        primarily because of declines in Metals and Machinery. Imports,
        expansion. The Indonesian economy benefited from a consumer-          notably in Textiles and Metals, edged down ¥41.6 billion, or
        led recovery, with Taiwan and Singapore making similar                2.7%, to ¥1,477.9 billion. Offshore transactions climbed ¥274.3
        progress on the back of strong exports. Exports to the U.S. by        billion, or 9.1%, to ¥3,284.6 billion, largely due to an increase in
        NIE and ASEAN countries slowed somewhat from the summer               Machinery transactions.
        onwards, but exports to China and other Asian countries were
        steady. Chinese exports continued their strong performance,           By Region
        with internal Chinese demand also benefiting from foreign direct      Trading transactions in Japan dipped ¥268.4 billion, or 3.3%, to
        investment. As a consequence, total overall growth for China          ¥7,895.3 billion, due to the transfer of the Iron and Steel business
        came to a strong 8%.                                                  to Marubeni-Itochu Steel Inc. Transactions in North America
          The Russian economy made a strong showing during the year           improved ¥6.9 billion, or 0.4%, to ¥1,606.8 billion, largely due to
        due to rising crude oil prices. In contrast, disruptions in capital   an increase in Energy transactions. European transactions rose
        markets and economic stagnation in Argentina and Brazil               ¥85.5 billion, or 23.4%, to ¥451.6 billion, mainly reflecting Utility
        showed no signs of abating.                                           and Infrastructure transactions. In Asia and Oceania, transac-
          The Japanese economy bottomed out thanks to strong exports.         tions fell ¥40.0 billion, or 6.7%, to ¥560.5 billion, primarily from
        However, consumer spending remained flat and capital expendi-         lower Energy and Textiles transactions. Transactions in other
        tures were lackluster, amid high unemployment and low                 regions, negatively impacted by lower Plant and Ship transac-
        personal income levels. A full-scale economic recovery thus           tions, declined ¥4.6 billion, or 0.6%, to ¥815.8 billion.
        remained a distant prospect. From autumn 2002, the economy
        began to lose steam as exports and industrial production peaked




50   Marubeni Corporation 2003
Total Volume of Trading Transactions by Region                        East. Complementing this strong performance was a withdrawal
(Years ended March 31)
                                                                      from unprofitable businesses in the U.S., which helped to take
                                                                      gross trading profit up 35.3%, or ¥3.6 billion, to ¥13.9 billion
                                                            8,163.8
Japan                                                                 (US$116 million).
                                                          7,895.3
                                                                      Transportation & Industrial Machinery transactions
North               1,599.9                                           benefited mainly from an upsurge in aircraft-related business,
America
                    1,606.8                                           rising 0.3%, or ¥2.4 billion, over the previous year to ¥776.6
                    366.1
                                                                      billion (US$6,471 million). Due both to this and favorable
Europe
                    451.6
                                                                      progress in the industrial machinery business, gross trading
                                                                      profit rose 3.6%, or ¥1.9 billion, to ¥54.4 billion (US$453 million).
                     600.5
Asia &                                                                Energy transactions grew due to a rise in oil-related transac-
Oceania
                     560.5
                                                                      tions, lifting total sales in the area 5.1%, or ¥112.8 billion, to
Other                 820.4                                           ¥2,309.8 billion (US$19,248 million). However, a fall in profits
Regions                                                               from oil-related businesses brought gross trading profit down
                      815.8

(Billions of Yen)
                                                                      2.2%, or ¥0.7 billion, to ¥29.6 billion (US$247 million).
                                                                      Metals & Mineral Resources transactions suffered from falling
     2002              2003
                                                                      prices in the non-ferrous light metals market, dropping 7.1% or
                                                                      ¥33.8 billion from the previous year to ¥442.3 billion (US$3,686
Total Volume of Trading Transactions and                              million). This took gross trading profit down 4.1%, or ¥0.6
Gross Trading Profit by Operating Segment                             billion, to ¥14.0 billion (US$117 million).
The Company’s operating segments by which management                  Chemicals transactions were buoyed by the rise in crude oil and
evaluates performance and allocates resources are classified in       naphtha prices, with sales of organic and synthetic fiber
terms of the nature of the products and services or geographic        materials growing to push total sales up 5.8%, or ¥31.1 billion, to
areas. These segments are managed by product-specific Head            ¥569.9 billion (US$4,749 million). At ¥29.3 billion (US$244
Office divisions. Domestic branches and offices, and overseas         million), gross trading profit also benefited from growth in
corporate subsidiaries and branches operate in their respective       polyvinyl chloride alkali sales, improving on last year’s figure by
geographic areas as independent operating units. Each report-         2.0%, or ¥0.6 billion.
able segment purchases, distributes and markets a wide variety        Forest Products & General Merchandise transactions rose 2.4%,
of industrial and consumer goods, including raw materials and         or ¥17.3 billion, to ¥745.8 billion (US$6,215 million). The main
equipment in many industries and, in addition, provides the           contributing factors were growth in natural rubber sales and an
related financing, insurance and other services accompanying          upturn in the plywood market, which more than offset declines in
these operations primarily on a worldwide basis. The Company          wood-chip and domestic paper transactions. Gross trading profit
has twelve segments identified by product and service, in             rose 1.0%, or ¥0.4 billion, to ¥41.2 billion (US$344 million) as a
addition to its domestic branches and offices, and overseas           consequence of improved profitability due to cost reduction
corporate subsidiaries and branches.                                  initiatives in the paper business.
IT Business transactions fell 17.3%, or ¥81.0 billion from the        Agri-marine Products transactions fell 2.0% from the previous
previous year, to ¥386.2 billion (US$3,218 million) as a result of    year, or ¥21.3 billion, to ¥1,023.5 billion (US$8,529 million) as
weakness in the submarine cable-related business in Asia and a        seafood business volume fell. This unfavorable trend combined
general decline in the PC market. Gross trading profit in this area   with the removal from the scope of consolidation of an oil-
fell 1.9%, or ¥0.6 billion, to ¥32.6 billion (US$271 million).        expressing subsidiary to bring gross trading profit down 2.8% from
Utility & Infrastructure transactions increased 27.9%, or ¥92.1       the previous year, or ¥1.7 billion, to ¥58.6 billion (US$488 million).
billion, to ¥421.9 billion (US$3,515 million) as a result of orders   Textile transactions fell 15.5%, or ¥68.1 billion, to ¥370.3 billion
in Southeast Asian power generation and Near and Middle East          (US$3,086 million) due to stagnation in the domestic market and
water pipe projects. Gross trading profit increased 12.0%, or         a review of low-profit transactions. These factors resulted in a
¥1.3 billion, to ¥11.8 billion (US$99 million), in line with the      decline of ¥3.6 billion, or 12.9%, in gross trading profit to ¥24.5
increased sales.                                                      billion (US$204 million).
Plant & Ship transactions rose 22.6%, or ¥135.8 billion, over the     Development & Construction transactions rose 0.5%, or ¥0.9
previous year to ¥736.5 billion (US$6,137 million). These strong      billion, over the previous year to ¥185.8 billion (US$1,549
results were due to an increase in energy and chemical plant          million), as growth in domestic housing projects outweighed a
contracts secured mainly in Africa and the Near and Middle            contraction in installation contracts. Improved profit margins




                                                                                                                      Marubeni Corporation 2003   51
        were an additional factor in taking gross trading profit up 5.7%,      provision for doubtful accounts made in the previous fiscal year
        or ¥1.8 billion, to ¥34.0 billion (US$284 million).                    pursuant to the @ction 21 “A” PLAN initiated in the previous
        Finance & Logistics Business transactions dropped 18.6%, or            year, the provision for doubtful accounts declined 87.1%, or ¥38.3
        ¥8.6 billion, to ¥37.8 billion (US$315 million) as a result of the     billion, to ¥5.7 billion (US$47 million).
        removal from the scope of consolidation of certain subsidiaries
        operating in lease-related businesses. Gross trading profit fell
                                                                               Selling, General and Administrative Expenses
        3.7%, or ¥0.3 billion, to ¥6.5 billion (US$54 million).
                                                                               (Years ended March 31)
        Domestic Branches and Offices transactions fell 41.8%, or
        ¥124.4 billion, to ¥172.9 billion (US$1,441 million) due to the        1998                                             440.0
        transfer of the Iron & Steel business to Marubeni-Itochu Steel Inc.
        Gross trading profit declined 7.7%, or ¥0.5 billion, to ¥6.1 billion   1999                                                  458.2
        (US$51 million).
        Overseas Corporate Subsidiaries and Branches transactions              2000                                           411.5
        dropped 3.2%, or ¥34.7 billion, to ¥1,065.4 billion (US$8,878
        million) due to the abovementioned transfer of the Iron & Steel        2001                                          400.4
        business to Marubeni-Itochu Steel. Gross trading profit dropped
        2.5%, or ¥1.9 billion, to ¥72.8 billion (US$607 million).              2002                                      392.1



           As a result of the above factors, gross trading profit fell 2.8%,   2003                                  345.6
        or ¥12.2 billion to ¥424.6 billion (US$3,539 million).
                                                                               (Billions of Yen)



         Gross Trading Profit
         (Years ended March 31)
                                                                                 Consequently, operating profit climbed ¥72.6 billion to
         1998                                                        534.5     ¥73.4 billion (US$611 million).
                                                                                 Interest expenses, net of interest income improved ¥6.0 billion
         1999                                                    522.4         from the previous year to ¥23.5 billion, largely owing to a decrease
                                                                               in interest-bearing debt and lower interest rates. Despite gains on
         2000                                          453.5                   the exchange and sale of securities in its portfolio, the Company
                                                                               posted a loss on investment securities of ¥12.7 billion. This came as
         2001                                                479.8             the result of a combined loss of ¥30.9 billion, consisting of a loss on
                                                                               the devaluation of shareholdings in banks due to falling stock
         2002                                         436.8                    prices and a loss accompanying the establishment of an employee
                                                                               retirement benefit trust. The sale of real-estate holdings led to a
         2003                                        424.6                     gain on property and equipment of ¥8.5 billion. Other-net in other
                                                                               income (expenses) amounted to ¥19.3 billion, and included losses
         (Billions of Yen)
                                                                               incurred in liquidating subsidiaries and affiliated companies of
                                                                               ¥12.5 billion and net foreign currency transaction loss of ¥5.3
                                                                               billion, due to the yen’s appreciation. Although losses incurred in
          Selling, general and administrative expenses fell 11.9%, or          liquidating subsidiaries and affiliated companies declined year on
        ¥46.5 billion, to ¥345.6 billion (US$2,880 million). Reasons           year, a stronger yen led to larger exchange losses, causing other –
        include a nearly ¥20.0 billion decline in expenses (approximately      net to worsen by ¥2.8 billion.
        ¥16.5 billion excluding roughly ¥3.5 billion due to changes in            Consequently, income before income taxes and equity in
        exchange rates), owing to vigilant cost-reduction initiatives, and     earnings of affiliated companies amounted to ¥33.2 billion
        respective declines of around ¥15.0 billion from the transfer of       (US$276 million), reversing the previous fiscal year’s result by
        the Iron & Steel business to Marubeni-Itochu Steel Inc. and            ¥198.3 billion.
        withdrawal from unprofitable businesses. Because of a large




52   Marubeni Corporation 2003
   After posting heavy valuation losses in the previous year in     (3) Foreign currency fluctuations
line with the @ction 21 “A” PLAN, equity in earnings (losses) of    The Company and certain consolidated subsidiaries conduct
affiliated companies were ¥13.4 billion (US$112 million), turning   business in various foreign currencies. Fluctuations in these
around the previous fiscal year’s result by ¥32.4 billion.          currencies can thus impact business performance. The Company
   The result was net income of ¥30.3 billion (US$253 million),     and certain consolidated subsidiaries enter into foreign exchange
reversing the previous fiscal year’s net loss by ¥146.7 billion.    contracts principally to hedge foreign currency denominated
                                                                    transactions, assets and liabilities to minimize the effect of
                                                                    foreign currency fluctuations.
Net Income
(Years ended March 31)
                                                                    (4) Interest rate fluctuations
1998                                          17.2                  The Company procures funds through loans from financial
                                                                    institutions and from capital markets via the issuance of bonds
1999                (117.7)
                                                                    and other means. The Company has both fixed and variable-rate
                                                                    debt obligations. While most business assets can be shifted to
2000                                    2.1
                                                                    cover the risk of fluctuations in interest rates on borrowings,
                                                                    fluctuations in market interest rates may have an impact on
2001                                      15.0
                                                                    earnings. Through its Asset Liability Management program, the
                                                                    Company utilizes interest swaps contracts and other means to
2002                (116.4)
                                                                    reduce the risk of interest rate fluctuations.


2003                                   30.3                         (5) Gains (losses) on marketable equity
                                                                        securities and debt securities
(Billions of Yen)
                                                                    The Company and certain subsidiaries invest in marketable equity
                                                                    securities, debt securities and other available-for-sale securities
                                                                    with the intent of strengthening business relationships and other
3. SIGNIFICANT FACTORS IMPACTING                                    purposes. The companies determine the appropriate classification
   OPERATING RESULTS                                                of investment securities as either trading, held-to-maturity or
                                                                    available-for-sale securities at the date of purchase in accordance
(1) Macroeconomic conditions in Japan                               with Statement of Financial Accounting Standards No. 115,
    and other principal economies                                   Accounting for Certain Investments in Debt and Equity Securities.
Marubeni conducts business activities worldwide, and is thus        These trading and available-for-sale securities bear an intrinsic
affected by economic conditions both in its home country of         risk of fluctuation in their fair value.
Japan and abroad. Conversely, as a sogo shosha (general trading
company), Marubeni is active in multiple industries and             Trading securities
conducts businesses in Japan and many other countries, without      Trading securities are held for resale in anticipation of short-term
limiting its presence to any specific country. This diversified     market movements. Trading securities, consisting primarily of
portfolio of businesses helps to mitigate the effects of economic   marketable equity securities, are stated at fair value. Gains and
fluctuations on Marubeni’s performance.                             losses are included in (loss) gain on investment securities.

(2) Fluctuations in the prices of various                           Available-for-sale securities
    commodities                                                     Marketable equity securities not classified as trading securities,
Because Marubeni handles a variety of merchandise, its business     and debt securities not classified as trading nor held-to-maturity
performance is impacted by fluctuations in market conditions.       securities are classified as available-for-sale securities and are
The Company and certain consolidated subsidiaries enter into        carried at fair value, with the unrealized gains and losses, net of
commodity futures and forward contracts principally as a means      taxes, reported in accumulated other comprehensive loss in
of hedging the risks associated with certain inventories, commit-   shareholders’ equity.
ments and forecasted transactions.




                                                                                                                  Marubeni Corporation 2003   53
        (6) Retirement benefits and pension plans                                                                                                           Billions of yen
                                                                                                                                                           March 31, Y-o-Y
        The Company has a lump-sum retirement plan based on
                                                                                                                                                            2003      change
        compensation as of the date of severance and years of service
                                                                                Short-term loans:
        and a defined benefit retirement plan.
                                                                                   Short-term loans from bank and others ..... ¥ 548.4 ¥-170.8
          The Company’s retirement plan is based on a welfare pension
        plan as defined by the Welfare Pension Insurance Law of Japan,             Commercial paper .........................................                  12.7    +12.7
        and consists of two components: a public pension plan managed           Interest-bearing portion of long-term debt:
        on behalf of the Japanese government in the form of a substitu-            Long-term loans .............................................            1,736.5     -23.6
        tional portion and a corporate pension plan with a defined                 Bonds ...............................................................      447.3    -258.2
        compensation rate of 5.5%.                                              Total interest-bearing liabilities ........................ ¥2,745.0 ¥-439.9
           The persistence of low interest rates and a deteriorating            (Cash and cash equivalents and
        investment environment may weaken the financial integrity of             time deposits) ....................................................         (480.8)    (-8.9)
        the Company’s pension fund, increasing the risk of higher
                                                                                Interest-bearing debt, net of cash and
        retirement benefit obligations and pension costs. To minimize
                                                                                 cash equivalents and time deposits ............... ¥2,264.1 ¥-448.8
        this risk, the Company adopted a cash balance plan and reduced
        retirement benefits for certain employees effective April 1, 2003.
                                                                                   Total shareholders’ equity decreased ¥3.8 billion, 1.5%, to
           Under the cash balance plan, the Company’s former compen-
                                                                                ¥260.1 billion. This mainly reflected an increase in accumulated
        sation rate of 5.5% has been pegged to the variable interest rate
                                                                                other comprehensive loss. The main components were a
        of government bonds (guaranteed minimum of 2.5%). The
                                                                                deterioration of ¥20.9 billion in currency translation adjustments
        guaranteed period of pension payments has been extended from
                                                                                and an ¥8.7 billion increase in unrealized losses on securities.
        15 to 20 years.
                                                                                  As a consequence, the net debt-to-equity ratio improved
           To minimize investment risk, the Company obtained
                                                                                1.57 points to 8.71 times, from 10.28 times at the previous
        approval from Japan’s Minister of Health, Labour and Welfare
                                                                                fiscal year-end.
        for exemption from future benefit obligations with respect to
        the substitutional portion of the welfare pension fund on
                                                                                5. CASH FLOWS
        April 15, 2003. The final date for transfer of all pension assets
        to the government is currently scheduled for some time after
                                                                                Net cash provided by operating activities came to ¥194.8 billion
        October 2003.
                                                                                as a result of the greater asset efficiency brought on by streamlin-
                                                                                ing receivables and inventories. Net cash provided by investing
        4. FINANCIAL CONDITION
                                                                                activities rose ¥38.7 billion over the previous year to ¥113.2
                                                                                billion due to sales and redemption of marketable and invest-
        Consolidated total assets fell ¥484.2 billion, or 10.1% year on
                                                                                ment securities and the collection of loans receivable. Accord-
        year, to ¥4,321.5 billion due to a review of low-profit transactions,
                                                                                ingly, free cash inflow for the year came to ¥308.0 billion.
        business reorganization, and sale of various assets.
                                                                                   Net cash used in financing activities was ¥294.0 billion, after
          Consolidated interest-bearing debt fell in line with a
                                                                                free cash inflow was used to reduce interest-bearing debt. Cash
        decrease in receivables and inventories, as well as the sale and
                                                                                and cash equivalents at year-end were ¥466.5 billion, ¥0.1 billion
        redemption of marketable and investment securities. Interest-
                                                                                lower than at the previous fiscal year-end.
        bearing debt dropped ¥439.9 billion, or 13.8%, to ¥2,745.0
        billion. Net interest-bearing debt excluding cash and cash
                                                                                6. LIQUIDITY AND FUNDING SOURCES
        equivalents was down ¥448.8 billion, or 16.5%, to ¥2,264.1
        billion yen. A breakdown of cash and cash equivalents and net
                                                                                (1) Funding Policy
        interest-bearing debt is as follows.
                                                                                Marubeni’s fundamental policy is to maintain a balanced mix of
                                                                                funding in line with the requirements of its asset portfolio. The
                                                                                goal is to sustain a stable level of liquidity while at the same time
                                                                                trimming financing costs. In the year ended March 31, 2003,




54   Marubeni Corporation 2003
loans from financial institutions comprised approximately 80%                             7. COMMITMENTS AND
of total funding sources. The remaining approximately 20% was                                CONTINGENT LIABILITIES
raised from capital markets via the issuance of bonds and
commercial paper. The Company is also securitizing receivables                            The Company guarantees debt of affiliated companies and third
and taking other actions to diversify funding sources. The                                parties in the ordinary course of business. Should the guaranteed
Company will continue its drive to attain an optimal funding                              parties fail to make payments, the Company would be required
structure by maintaining existing relationships with major                                to make such payments under these guarantees. The term of the
financial institutions and by flexibly securing funding from                              guarantees is basically one year. The related guarantee fees are
capital markets via bonds issuances and other means, while                                primarily received quarterly or semi-annually. Certain of these
diversifying funding sources.                                                             guarantees were secured by guarantees issued to the Company
                                                                                          by other parties. The outstanding balance of guarantees, which
(2) Liquidity                                                                             approximated the maximum potential payment under these
As part of contingency plans, Marubeni is taking steps to secure                          guarantees, was ¥276,431 million ($2,303,592 thousand), includ-
the liquidity necessary to withstand unforeseen changes in its                            ing ¥151,355 million ($1,261,292 thousand) to affiliated compa-
business environment. These steps primarily involve maintain-                             nies, at March 31, 2003, net of the amount secured by guarantees
ing a sufficient balance of cash deposits and committed credit                            issued to the Company by other parties of ¥21,258 million
facilities. As of March 31, 2003, the balance of cash deposits on a                       ($177,150 thousand).
consolidated basis was approximately ¥480.0 billion. The                                     The Company, its subsidiaries and affiliated companies
Company’s committed credit facilities totaled approximately                               conduct business activities on a global scale and are involved in
¥420.0 billion, consisting of ¥400.0 billion yen for the parent                           transactions which are subject to review and jurisdiction by a
company and approximately ¥20.0 billion for major overseas                                wide range of authorities, both in Japan and abroad. Such
subsidiaries. Of the parent company’s committed credit facility,                          business activities are not without risk and, from time to time,
¥152.0 billion was switched to a long-term three-year commit-                             may involve legal actions, claims or other disputes. Although
ted credit facility upon renewal in March 2003, in a significant                          there are various matters pending at any one time, management
step toward ensuring ample liquidity. Marubeni also holds                                 is of the opinion that settlement of all such matters pending at
highly liquid marketable securities among its assets, virtually                           March 31, 2003 would not have a material effect on the consoli-
eliminating any liquidity concerns.                                                       dated financial position or results of operations of the Companies.


(3) Credit ratings                                                                        8. CONSOLIDATED SUBSIDIARIES AND
Improving Marubeni’s credit ratings remains one of the most                                  AFFILIATED COMPANIES
important management tasks. Marubeni hopes to restore all its
credit ratings to an investment grade as soon as possible through                         As of March 31, 2003, Marubeni had 484 companies within the
dialogue with ratings agencies aimed at promoting greater                                 scope of consolidation, 31 less than the 515 companies as of
understanding of its businesses, along with strengthening its                             March 31, 2002. This latest figure accounts for the addition of 17
earnings power and improving its financial structure.                                     newly consolidated companies and the removal of 48 companies
   Marubeni’s credit ratings as of June 30, 2003 are listed below.                        from the scope of consolidation. The 484 companies included 327
                                                                                          subsidiaries and 157 affiliates. There were 176 companies based
                                                                   As of June 30, 2003    in Japan, while 308 were located overseas.
                                                                    Long          Short      A profitability comparison of consolidated companies is
Ratings agency                                                      term          term
                                                                                          presented as follows.
Japan Credit Rating Agency, Ltd. .....................              BBB+           J-2
Ratings & Investment Information, Inc. ..........                    BB+           a-3
Moody’s Investors Service ................................             B1          NP
Standard & Poor’s ..............................................         –           C




                                                                                                                                       Marubeni Corporation 2003   55
        Profitability Comparison of Consolidated Companies
                                                                                                                         Billions of yen
                                                                                           March 31, 2003                March 31, 2002                       Y-o-Y change
                                                                                      Domestic Overseas Total        Domestic Overseas   Total          Domestic Overseas Total
        Profitable companies
          No. of companies ............................................                  128     247      375          134      257         391             -6      -10    -16
           Profit .................................................................   ¥ 24.4 ¥ 40.9 ¥ 65.3           ¥ 16.1 ¥ 34.9      ¥ 51.0           ¥ 8.3    ¥ 6.0 ¥14.3
        Unprofitable companies
           No. of companies ............................................                  48      61      109            53      71         124             -5      -10    -15
           Loss ...................................................................   ¥(17.1) ¥(14.0) ¥(31.1)        ¥(26.4) ¥(81.1)    ¥(107.5)         ¥ 9.3    ¥67.1 ¥76.4
        Total
          No. of companies ............................................                  176     308      484          187      328         515            -11      -20    -31
           Profit (loss) .......................................................      ¥ 7.2 ¥ 26.9 ¥ 34.1            ¥(10.3) ¥(46.2)    ¥ (56.5)        +¥17.5 +¥73.1 +¥90.6
        Percentage of profitable companies .................                          72.7% 80.2% 77.5%              71.7% 78.4%         75.9%            +1.0    +1.8    +1.6
                                                                                                                                                         Points   Points Points




        9. RECENTLY ISSUED ACCOUNTING                                                                       composed of portfolio units at the very forefront of their
           STANDARDS                                                                                        respective industries. Guided by the new plan, risk assets will be
                                                                                                            reduced and replaced by quality assets, a move expected to make
        In June 2001, FASB issued Statement of Financial Accounting                                         a positive contribution to profit margins. Numerical targets have
        Standards No. 143, Accounting for Asset Retirement Obligations                                      been set as follows: consolidated net income of ¥50 billion, net
        (“SFAS 143”), which is effective for fiscal years beginning after                                   interest-bearing debt of ¥2 trillion or less, and a net debt-to-
        June 15, 2002. SFAS 143 requires legal obligations associated with                                  equity ratio four to five times or less. During the three years
        the retirement of long-lived assets to be recognized at their fair                                  covered by the “V” PLAN, the Company plans to increase its
        value at the time that the obligations are incurred. Upon initial                                   shareholders’ equity. Marubeni put forward a proposal to the
        recognition of a liability, that cost should be capitalized as part of                              regular General Meeting of Shareholders held in June 2003 to
        the related long-lived asset and allocated to expense over the                                      partially revise the Articles of Incorporation to enable the
        useful life of the asset. The Company adopted SFAS 143 on April 1,                                  Company to issue preferred shares. This will give the Company
        2003, and, based on current circumstances, does not believe that                                    more options for making flexible and swift decisions on reinforc-
        the impact of adoption of SFAS 143 will have a material effect on                                   ing its capital structure.
        the Company’s financial position or results of operations.                                             Moreover, the Company will implement business strategies
                                                                                                            tailored to the demands of individual business models, simulta-
        10. MANAGEMENT POLICIES                                                                             neously ensuring that the utmost emphasis is placed upon risk-
                                                                                                            return profiles and cash flows. These measures will introduce a
        On the basis of the @ction 21 “A” PLAN unveiled in November                                         new level of robustness to management practices. The position-
        2001, Marubeni has pursued ever-higher profits in core business                                     ing of PATRAC (Profit After Tax Less Risk Asset Cost) as the
        areas, reduced expenses, and turned around unprofitable                                             most important performance indicator will continue to be
        businesses. As a result, the Company achieved consolidated net                                      instrumental in this respect, ensuring returns commensurate
        income of ¥30 billion and lowered interest-bearing debt to under                                    with the risks in any given business. At the same time, resources
        ¥2,500.0 billion during the year, ended March 31, 2003, both of                                     will be selectively concentrated on portfolio units, which
        which numbered among the numerical targets set under the                                            constitute the fundamental unit of operations on a consolidated
        above plan.                                                                                         basis. This will give Marubeni a stronger financial structure and
           Now, the Company plans to take its profitability and vitality,                                   reinforce its profit base.
        which were successfully restored under the @ction 21 “A” PLAN,
        to the next level. To this end, the Company will embark upon a                                      11. OUTLOOK
        new three-year medium-term management plan: the “V” PLAN
        launched in April 2003.                                                                             In the year ending March 31, 2004, consumer spending and
           Under the “V” PLAN, the Company will take as its basic                                           capital investments are expected to bounce back in the U.S. as a
        management policy the creation of a robust corporate group                                          consequence of the swift conclusion of war in Iraq, allowing the




56   Marubeni Corporation 2003
U.S. economy to commence a modest recovery. A similar path is                                                                                                                      Billions of yen
                                                                                                                                                                               Year ending   Year ended
likely to be followed by Asian economies on the back of renewed                                                                                                                 March 31,     March 31,
growth in exports to the U.S. The unabated spread of Severe                                                                                                                        2004          2003
                                                                                                                                                                                (forecast)     (results)
Acute Respiratory Syndrome (SARS), however, may dampen                                                 Total assets .......................................................    ¥4,200.0      ¥4,321.5
economic growth across the region, most notably in China.
                                                                                                       Total Shareholders’ equity .............................                   290.0         260.1
  In Japan, the prospects for an upturn in consumer spending are
                                                                                                       Net interest bearing debt ...............................                2,200.0       2,264.1
uncertain, with no strong signs of marked improvement in
unemployment and personal income levels. However, increased                                            Net debt-to-equity ratio (times) ....................                        7.59          8.71

exports to both the U.S. and Asian countries are expected to
underpin steady economic growth. The persistence of deflationary                                         The assumptions used in preparing forecasts for the year
conditions and worsening business and consumer sentiment,                                              ending March 31, 2004 are: exchange rate of roughly ¥120 to the

however, are likely to lead, at best, to a gradual economic recovery.                                  U.S. dollar; a short-term prime rate for the Japanese yen of
  Against this backdrop, Marubeni started a new three-year                                             1.375%; and a long-term prime rate of 1.4%.
medium-term management plan, the “V” PLAN, in April 2003.                                                 The above and other forward-looking statements about the

Guided by this plan, the Company will continue to reduce risk                                          performance of Marubeni and its Group companies found in this
assets and replace them with quality assets. These moves will                                          document are based on management’s assumptions in light of
play an important role in efforts to increase profit margins,                                          current information. Any number of uncontrollable and unforeseen

which management anticipates will translate into consolidated                                          factors may cause forecasts to differ materially from actual results.
net income of ¥33.0 billion for the year ending March 31, 2004, an
increase of ¥2.7 billion over the year under review.                                                   12. DIVIDENDS
   Marubeni will continue to reduce net interest-bearing debt,
                                                                                                       Providing shareholders with steady dividend payments ranks
excluding cash and cash equivalents, through the timely
                                                                                                       alongside improving shareholders’ equity as one of a
collection of receivables, the sale of certain businesses and other
                                                                                                       corporation’s most important responsibilities. For the year ended
assets, and other means. In light of foreign exchange rates and
                                                                                                       March 2000 to the year ended March 2002, however, the Company
other uncertain factors, Marubeni expects to lower net interest-
                                                                                                       did not pay dividends, in order to increase shareholders’ equity.
bearing debt, excluding cash and cash equivalents, to ¥2,200
                                                                                                          For the year under review, the Company paid year-end
billion or less by March 31, 2004.
                                                                                                       dividends of ¥3.00 per share, as the financial targets set in
                                                                                Billions of yen        @ction21 “A” PLAN have been achieved.
                                                                           Year ending   Year ended       The Company also plans to pay year-end dividends of ¥3.00
                                                                            March 31,     March 31,
                                                                               2004          2003      per share for the year ending March 31, 2004.
                                                                            (forecast)     (results)
Total volume of trading transactions ...........                           ¥8,200.0      ¥8,793.3


Gross trading profit ........................................                  420.0         424.6     Note: Segment performance throughout this report is based on business
Selling, general and administrative expenses ....                              (335.0)       (345.6)         results for the year ended March 31, 2003. Information regarding busi-
                                                                                                             ness lines, products and services is as of April 2003. Further, from
Provision for doubtful accounts ...................                              (8.0)         (5.7)         April 2003, the IT Business Division has been renamed the Telecom &
Operating profit ..............................................                 77.0           73.4          Information Division.
Interest expense, net of interest income ......                                 (26.0)        (23.5)
Dividends .........................................................               5.0           6.8
Loss on investment securities .......................                                         (12.7)
Loss (gain) on property and equipment ......
Other-net ..........................................................
Income before income taxes and equity in
                                                                       }        (10.0)          8.5
                                                                                              (19.3)


 earnings of affiliated companies .................                             46.0           33.2
Income taxes ....................................................               (26.0)        (16.3)
Equity in earnings of affiliated companies ...                                   13.0          13.4
Net income .......................................................         ¥    33.0     ¥    30.3




                                                                                                                                                                              Marubeni Corporation 2003    57
        Consolidated Balance Sheets
         Marubeni Corporation
         At March 31, 2003 and 2002


                                                                                                                                                             Thousands of
                                                                                                                                                              U.S. Dollars
                                                                                                                                     Millions of Yen           (Note 1)
        ASSETS                                                                                                                    2003            2002           2003

        Current assets:
         Cash and cash equivalents (Notes 2 and 15) .............................................                              ¥ 466,511      ¥ 466,642      $ 3,887,592
         Time deposits (Notes 7 and 15) ...................................................................                       14,331          5,336          119,425
         Investment securities (Notes 2, 3, 7 and 15):
           Marketable equity securities ...................................................................                          182              751          1,517
           Other ..........................................................................................................       13,108           63,198        109,233
         Notes and accounts receivable – trade (Notes 5 and 7):
           Notes receivable .......................................................................................               108,048         181,566        900,400
           Accounts receivable .................................................................................                  824,784         919,741      6,873,200
           Due from affiliated companies ...............................................................                          131,655         182,708      1,097,125
           Allowance for doubtful accounts ..........................................................                             (32,068)        (34,213)      (267,233)
         Inventories (Notes 2 and 7) ..........................................................................                   397,714         439,278      3,314,283
         Advance payments to suppliers ................................................................                            67,741          67,074        564,508
         Deferred income taxes (Note 10) ................................................................                          34,594          33,207        288,283
         Prepaid expenses and other current assets ..............................................                                 175,474         162,271      1,462,284
                Total current assets ...........................................................................                2,202,074       2,487,559     18,350,617

        Investments and long-term receivables:
          Affiliated companies (Notes 2, 4 and 7) .....................................................                          364,648          283,944      3,038,733
          Securities and other investments (Notes 2, 3, 7 and 15):
            Marketable equity securities ...................................................................                     112,589          164,484        938,242
            Other ..........................................................................................................     337,955          389,373      2,816,292
          Notes, loans and accounts receivable – trade, net of unearned interest,
           less allowance for doubtful accounts of
           ¥110,462 million ($920,517 thousand) in 2003 and
           ¥115,341 million in 2002 (Notes 2, 5, 7 and 15) ........................................                              245,887          332,254      2,049,058
          Property leased to others, at cost, less accumulated depreciation of
           ¥50,282 million ($419,017 thousand) in 2003 and ¥93,402 million
           in 2002 (Notes 2, 6 and 7) ............................................................................                201,871         249,781      1,682,258
                 Total investments and long-term receivables ..............................                                     1,262,950       1,419,836     10,524,583

        Property and equipment, at cost (Notes 2 and 7):
          Land and land improvements ....................................................................                         171,037         181,675      1,425,308
          Buildings .......................................................................................................       276,190         306,152      2,301,583
          Equipment .....................................................................................................         279,089         302,286      2,325,742
                                                                                                                                  726,316         790,113      6,052,633
           Accumulated depreciation .........................................................................                    (265,985)       (278,239)    (2,216,541)
            Net property and equipment .................................................................                          460,331         511,874      3,836,092

        Prepaid pension cost (Note 9) ........................................................................                    113,005         93,829         941,708
        Deferred income taxes (Note 10) ...................................................................                       157,335        154,391       1,311,125
        Intangible assets (Notes 2 and 6) ...................................................................                      42,236         48,136         351,967
        Goodwill (Notes 2 and 6) ................................................................................                  23,553         17,393         196,275
        Other assets ......................................................................................................        59,998         72,651         499,983
                Total assets ........................................................................................          ¥4,321,482     ¥4,805,669     $36,012,350




58   Marubeni Corporation 2003
                                                                                                                                                 Thousands of
                                                                                                                                                  U.S. Dollars
                                                                                                                    Millions of Yen                (Note 1)
LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                             2003             2002                2003

Current liabilities:
 Short-term loans (Notes 7, 8 and 15) ...........................................................             ¥ 561,139       ¥ 719,254           $ 4,676,158
 Current portion of long-term debt (Notes 7, 8 and 15) ............................                             402,186         528,048             3,351,550
 Notes and accounts payable – trade:
   Notes and acceptances payable (Note 7) ...............................................                        196,282         222,066            1,635,683
   Accounts payable .....................................................................................        608,386         624,962            5,069,883
   Due to affiliated companies ....................................................................               44,717          52,371              372,642
 Advance payments received from customers .........................................                               60,553          58,138              504,609
 Income taxes (Note 10) .................................................................................         13,773          10,967              114,775
 Deferred income taxes (Note 10) ................................................................                  1,984           1,490               16,533
 Accrued expenses and other current liabilities .......................................                          216,880         223,912            1,807,334
        Total current liabilities .....................................................................        2,105,900       2,441,208           17,549,167




Long-term debt, less current portion (Notes 7, 8 and 15) ..........................                            1,902,327       2,048,454           15,852,725



Employees’ retirement benefits (Note 9) .....................................................                      9,571          12,893                79,758



Deferred income taxes (Note 10) ...................................................................              10,972               6,345             91,433



Minority interests in consolidated subsidiaries .......................................                          32,661           32,874              272,175



Commitments and contingent liabilities (Note 17)




Shareholders’ equity (Note 11):
  Common stock:
    Authorized shares – 3,000,000,000
    Issued and outstanding shares – 1,494,021,081
     in 2003 and 2002 .....................................................................................     194,039          194,039            1,616,992
  Additional paid-in capital ..........................................................................          87,765          216,993              731,375
  Retained earnings (accumulated deficit) ..................................................                     64,786          (94,754)             539,883
  Accumulated other comprehensive loss (Notes 3, 9, 10 and 12) ............                                     (86,441)         (52,375)            (720,342)
  Cost of common stock in treasury – 756,776 shares
   in 2003 and 88,388 shares in 2002 ............................................................                    (98)             (8)                (816)
         Total shareholders’ equity ...............................................................              260,051         263,895            2,167,092
         Total liabilities and shareholders’ equity ...................................                       ¥4,321,482      ¥4,805,669          $36,012,350
See accompanying notes.



                                                                                                                                              Marubeni Corporation 2003   59
        Consolidated Statements of Operations
         Marubeni Corporation
         Years ended March 31, 2003, 2002 and 2001


                                                                                                                                                Thousands of
                                                                                                                                                 U.S. Dollars
                                                                                                                  Millions of Yen                 (Note 1)
                                                                                                        2003           2002           2001            2003

        Gross trading profit ...............................................................          ¥424,643     ¥ 436,804        ¥479,754    $3,538,692
          (Total volume of trading transactions:
            2003, ¥8,793,303 million ($73,277,525 thousand)
            2002, ¥8,972,245 million
            2001, ¥9,436,863 million) (Notes 2, 4 and 13)
        Expenses:
          Selling, general and administrative expenses .................                               345,612       392,092         400,356        2,880,100
          Provision for doubtful accounts (Note 5) .........................                             5,660        43,936          37,916           47,167
                 Total ...........................................................................     351,272       436,028         438,272        2,927,267
        Operating profit .....................................................................          73,371           776          41,482          611,425
        Other income (expenses):
          Interest expense, net of interest income:
            2003, ¥26,605 million ($221,708 thousand);
            2002, ¥45,773 million;
            2001, ¥75,262 million .......................................................              (23,513)      (29,492)        (29,532)       (195,942)
          Dividends .............................................................................        6,797         7,477           7,692          56,642
          (Loss) gain on investment securities (Note 3) ..................                             (12,732)      (83,814)          2,318        (106,100)
          Gain (loss) on property and equipment (Note 6) ............                                    8,530       (43,636)          3,738          71,083
          Other – net (Notes 2 and 14) ...............................................                 (19,287)      (16,466)        (19,010)       (160,725)
                 Total ...........................................................................     (40,205)     (165,931)        (34,794)       (335,042)
        Income (loss) before income taxes and equity
         in earnings (losses) of affiliated companies ...................                               33,166      (165,155)          6,688         276,383
        Provision (benefit) for income taxes (Note 10):
          Current .................................................................................     16,931         19,704         21,784         141,091
          Deferred ...............................................................................        (657)       (87,378)       (13,258)         (5,475)
                                                                                                        16,274        (67,674)         8,526         135,616
        Income (loss) before equity in earnings (losses)
         of affiliated companies .......................................................                16,892        (97,481)        (1,838)        140,767
        Equity in earnings (losses) of affiliated companies –
         net (after income tax effects) (Notes 4 and 10) ..................                             13,420       (18,937)         16,874      111,833
        Net income (loss) ...................................................................         ¥ 30,312     ¥(116,418)       ¥ 15,036    $ 252,600

                                                                                                                        Yen                     U.S. Dollars

        Basic earnings (loss) per 100 shares (Note 2) .....................                           ¥ 2,030      ¥ (7,792)        ¥ 1,006     $      16.92
        Diluted earnings (loss) per 100 shares (Note 2) ................                              ¥ 1,896      ¥ (7,792)        ¥   940     $      15.80
        See accompanying notes.




60   Marubeni Corporation 2003
Consolidated Statements of Changes in Shareholders’ Equity
Marubeni Corporation
Years ended March 31, 2003, 2002 and 2001


                                                                                         Millions of Yen                                      Thousands of U.S. Dollars (Note 1)
                                                                  2003                        2002                         2001                             2003
Common stock:
 Balance at beginning of year ........                  ¥ 194,039                    ¥ 194,039                    ¥194,039                      $ 1,616,992
 Balance at end of year ...................             ¥ 194,039                    ¥ 194,039                    ¥194,039                      $ 1,616,992
Additional paid-in capital:
 Balance at beginning of year ........                  ¥ 216,993                    ¥ 216,993                    ¥216,993                      $ 1,808,275
 Transfer to retained earnings
  (accumulated deficit)
  (Note 11) .........................................    (129,228)                           –                           –                       (1,076,900)
 Balance at end of year ...................             ¥ 87,765                     ¥ 216,993                    ¥216,993                      $ 731,375
Retained earnings
 (accumulated deficit):
 Balance at beginning of year ........                  ¥ (94,754)                   ¥ 21,664                     ¥    6,628                    $ (789,617)
 Net income (loss) ...........................             30,312        ¥ 30,312     (116,418)      ¥(116,418)       15,036      ¥ 15,036         252,600         $ 252,600
 Transfer from additional
  paid-in capital (Note 11) ..............               129,228                             –                           –                          1,076,900
 Balance at end of year ...................             ¥ 64,786                     ¥ (94,754)                   ¥ 21,664                      $     539,883
Accumulated other
 comprehensive loss (Note 12):
 Balance at beginning of year ........                  ¥ (52,375)                   ¥ (90,398)                   ¥(93,357)                     $ (436,459)
 Effect of change in accounting
  standard (Note 2) ..........................                                  –                        1,426                           –                                 –
 Unrealized (losses) gains on
  investment securities, net of
  reclassification (Note 3) ...............                                (8,749)                      14,628                     (37,568)                          (72,908)
 Currency translation adjustments,
  net of reclassification ...................                             (20,854)                      24,137                     10,362                           (173,783)
 Unrealized losses on derivatives ......                                   (4,101)                      (2,141)                         –                            (34,175)
 Minimum pension liability
  adjustment (Note 9) ......................                                 (362)                         (27)                    30,165                             (3,017)
 Other comprehensive (loss)
  income, net of tax .........................              (34,066)      (34,066)       38,023         38,023         2,959         2,959          (283,883)       (283,883)
 Comprehensive (loss) income ......                                      ¥ (3,754)                   ¥ (78,395)                   ¥ 17,995                         $ (31,283)
 Balance at end of year ...................             ¥ (86,441)                   ¥ (52,375)                   ¥(90,398)                     $ (720,342)
Cost of common stock in treasury:
 Balance at beginning of year ........                  ¥        (8)                 ¥       (1)                  ¥       (2)                   $         (67)
 Treasury stock
  (repurchased) sold .......................                    (90)                         (7)                           1                            (749)
 Balance at end of year ...................             ¥       (98)                 ¥       (8)                  ¥       (1)                   $       (816)

                                                                                         Millions of Yen                                      Thousands of U.S. Dollars (Note 1)
                                                                  2003                        2002                         2001                             2003
Disclosure of reclassification
 amount for the year ended:
 Unrealized (losses) gains on
  investment securities arising
  during the period .........................           ¥ (19,036)                   ¥ (23,755)                   ¥(43,951)                     $ (158,633)
 Less: reclassification adjustments
  for losses (gains) included in
  net income (loss) ..........................              10,287                     38,383                        6,383                             85,725
 Net unrealized (losses) gains .......                  ¥   (8,749)                  ¥ 14,628                     ¥(37,568)                     $     (72,908)
 Currency translation adjustments
  arising during period–
  (losses) gains .................................      ¥ (27,252)                   ¥ 22,298                     ¥ 13,688                      $ (227,100)
 Less: reclassification adjustments
  for losses (gains) included in
  net income (loss) ..........................               6,398                        1,839                       (3,326)                         53,317
 Net currency translation
  adjustments ..................................        ¥ (20,854)                   ¥ 24,137                     ¥ 10,362                      $ (173,783)
 Effect of change in
  accounting standard ....................              ¥         –                  ¥    1,426                   ¥       –                     $           –
 Unrealized losses on derivatives
  arising during the period ...........                      (4,618)                     (3,411)                          –                           (38,483)
 Less: reclassification adjustments
  for losses included in
  net income (loss) ..........................                 517                        1,270                           –                            4,308
 Net unrealized losses on
  derivatives ....................................      ¥    (4,101)                 ¥     (715)                  ¥       –                     $     (34,175)

See accompanying notes.
                                                                                                                                                        Marubeni Corporation 2003   61
        Consolidated Statements of Cash Flows
         Marubeni Corporation
         Years ended March 31, 2003, 2002 and 2001


                                                                                                                                                        Thousands of
                                                                                                                                                         U.S. Dollars
                                                                                                                         Millions of Yen                  (Note 1)
                                                                                                              2003            2002           2001             2003
        Operating activities
          Net income (loss) ......................................................................          ¥ 30,312       ¥(116,418)      ¥ 15,036     $     252,600
          Adjustments to reconcile net income (loss) to net cash
           provided by operating activities:
            Depreciation and amortization ...........................................                          63,665         71,052         69,914           530,542
            Provision for doubtful accounts .........................................                           5,660         43,936         37,916            47,167
            Equity in (earnings) losses of affiliated companies,
              less dividends received ......................................................                   (5,555)        31,647          (6,740)         (46,292)
            Loss (gain) on investment securities ..................................                            12,732         83,814          (2,318)         106,100
            (Gain) loss on property and equipment ............................                                 (8,530)        43,636          (3,738)         (71,083)
            Deferred income taxes .........................................................                      (657)       (87,378)        (13,258)          (5,475)
            Changes in operating assets and liabilities:
               Notes and accounts receivable .......................................                           76,603        291,263         64,461           638,358
               Inventories .........................................................................           15,637         35,970         20,495           130,308
               Advance payments to suppliers and prepaid
                 expenses and other current assets ................................                            (1,062)       (58,369)          5,678           (8,850)
               Prepaid pension cost ........................................................                   (8,819)        (9,322)        (84,507)         (73,492)
               Notes, acceptances and accounts payable .....................                                  (13,898)      (148,059)         55,801         (115,817)
               Advance payments received from customers and
                 accrued expenses and other current liabilities ...........                                   19,155          13,066         23,354           159,625
               Income taxes ......................................................................             3,996            (162)       (15,923)           33,300
            Other .....................................................................................        5,549           3,780         13,134            46,242
          Net cash provided by operating activities ............................                             194,788         198,456        179,305         1,623,233
        Investing activities
          Proceeds from sales and redemptions of securities and
           other investments ...................................................................             108,092         224,832         283,634          900,767
          Purchases of securities and other investments .....................                                (82,796)       (158,546)       (133,590)        (689,967)
          Proceeds from sales of property and equipment and
           property leased to others .......................................................                   47,783         19,432         65,830           398,192
          Purchases of property and equipment and property
           leased to others .......................................................................          (59,663)        (76,783)       (95,430)         (497,192)
          Collection of loans receivable .................................................                   165,363         114,806        148,999         1,378,025
          Loans made to customers ........................................................                   (61,523)        (58,879)       (56,724)         (512,692)
          Other .........................................................................................     (4,015)          9,642        (24,726)          (33,458)
          Net cash provided by investing activities .............................                            113,241          74,504        187,993           943,675
        Financing activities
          Net decrease in short-term loans ............................................                       (53,423)       (29,498)       (150,052)         (445,192)
          Proceeds from long-term debt ................................................                       368,218        509,708         374,323         3,068,483
          Payments of long-term debt ....................................................                    (609,920)      (632,830)       (680,791)       (5,082,667)
          (Purchase) sale of treasury stock ............................................                          (90)            (5)              1              (750)
          Other .........................................................................................       1,214          2,521             394            10,118
          Net cash used in financing activities .....................................                        (294,001)      (150,104)       (456,125)       (2,450,008)
        Effect of exchange rate changes on cash and
         cash equivalents .........................................................................           (14,159)        13,975          13,330       (117,991)
        Net (decrease) increase in cash and cash equivalents ..........                                          (131)       136,831         (75,497)        (1,091)
        Cash and cash equivalents at beginning of year ...................                                    466,642        329,811         405,308      3,888,683
        Cash and cash equivalents at end of year ...............................                            ¥ 466,511      ¥ 466,642       ¥ 329,811    $ 3,887,592

        Supplemental cash flow information:
          Cash paid during the year for:
            Interest ....................................................................................   ¥ 52,864       ¥ 82,460        ¥ 108,358    $     440,533
            Income taxes ..........................................................................           12,935         19,866           37,707          107,792
          Non-cash investing activities:
            Exchange of assets:
              Fair value of assets received ............................................                       30,270         48,660         23,039           252,250
              Carrying value of assets surrendered ............................                                24,239         47,148         28,005           201,992
            Contribution to joint venture:
              Carrying value of stocks received ..................................                                   –        25,495                –                –
              Carrying value of assets contributed .............................                                     –       201,990                –                –
              Carrying value of liabilities contributed .......................                                      –       176,495                –                –
            Contribution of securities to employee
             retirement benefit trusts ....................................................                     8,746                –              –          72,883
        See accompanying notes.

62   Marubeni Corporation 2003
Notes to Consolidated Financial Statements
Marubeni Corporation
Years ended March 31, 2003, 2002 and 2001


1. Basis of Financial Statements

Marubeni Corporation (the “Company”), a Japanese corporation,                    ed
                                                                       (5) deferr gain on sales of property for tax purposes, (6) ac-
maintains its books and records and prepares its financial             counting for long-lived assets, (7) accounting for derivative
statements in Japanese yen. The accompanying consolidated              instruments and hedging activities, and (8) accounting for sale-
financial statements differ from the non-consolidated financial        leaseback of real estate.
statements issued for domestic purposes in Japan. In addition to          Certain reclassifications have been made in the 2002 and 2001
consolidation, they reflect certain adjustments not recorded on        financial statements to conform to the presentation for 2003.
the Company’s books, which in the opinion of management are               The translation of Japanese yen amounts into U.S. dollar
appropriate to present the Company’s financial position, results       amounts for the year ended March 31, 2003 is included solely for
of operations, and cash flows in accordance with accounting            the convenience of readers outside of Japan and has been made
principles generally accepted in the United States of America.         at ¥120 to $1, the exchange rate prevailing on March 31, 2003.
The principal adjustments are: (1) r ecognition of installment sales   The translation should not be construed as a representation that
                          ecognition of the value ascribed to
on the accrual basis, (2) r                                            the Japanese yen amounts could be converted into U.S. dollars at
warrants, (3) accounting for pension costs, (4) accounting for         this or any other rate.
certain investments in debt and marketable equity securities,

2. Significant Accounting Policies

Consolidation                                                          Cash equivalents
The consolidated financial statements of the Company include           The Companies considers deposits in banks and securities
the accounts of domestic and foreign subsidiaries (together, the       purchased under resale agreements with an original maturity of
“Companies”). Significant intercompany transactions and                three months or less to be cash equivalents.
accounts have been eliminated. When a subsidiary sells stock to
unrelated third parties, the Company’s shareholdings in the
                                                                       Investment securities
                                                                       Management determines the appropriate classification of
subsidiary decreases while the price per share increases or
                                                                       investment securities as either trading, held-to-maturity or
decreases, depending on the price of the new stock issued. The
                                                                       available-for-sale securities at the date of purchase in accordance
Companies recognize such a change in the price per share as a
                                                                       with Statement of Financial Accounting Standards No. 115,
gain or loss at the time of the sale of stock.
                                                                       Accounting for Certain Investments in Debt and Equity Securities.
   In January 2003, the Financial Accounting Standards Board
(“FASB”) issued Interpretation (“Interpretation”) No. 46,              Trading securities
Consolidation of Variable Interest Entities. Interpretation No.46      Trading securities are held for resale in anticipation of short-term
requires the consolidation of variable interest entities in which      market movements. Trading securities, consisting primarily of
the Company absorbs a majority of the entity’s expected losses,        marketable equity securities, are stated at fair value. Gains and
receives a majority of the entity’s expected residual returns, or      losses are included in (loss) gain on investment securities.
both, as a result of ownership, contractual or other financial
interests in the entity. Interpretation No.46 applies immediately      Held-to-maturity securities
to variable interest entities created after January 31, 2003, and to   Debt securities are classified as held-to-maturity when the
variable interest entities in which the Company obtains an             Companies have the positive intent and ability to hold the
interest after that date. The adoption of Interpretation No.46 for     securities to maturity. Held-to-maturity securities are stated at
such entities did not have a material impact on the Company’s          amortized cost, adjusted for amortization of premiums and
financial position and results of operations. Interpretation No.46     accretion of discounts to maturity. Such amortization and
will also apply in interim period beginning July 1, 2003, to           accretion are included in interest income. Interest on securities
variable interest entities in which the Company holds a variable       classified as held-to-maturity is included in interest income.
interest that it acquired before February 1, 2003, and the             Declines in fair value judged to be other than temporary on held-
Company is currently reviewing the impact on the Company’s             to-maturity securities are included in (loss) gain on investment
financial position and results of operations.                          securities.

Use of estimates                                                       Available-for-sale securities
The preparation of financial statements in conformity with             Marketable equity securities not classified as trading and debt
accounting principles generally accepted in the United States of       securities not classified as trading or held-to-maturity are
America requires management to make estimates and assump-              classified as available-for-sale securities and are carried at fair
tions that affect the amounts reported in the financial statements     value, with the unrealized gains and losses, net of taxes,
and accompanying notes. Although the actual results could              reported in accumulated other comprehensive loss in share-
differ from those estimates, management does not believe that          holders’ equity. The amortized cost of debt securities in this
any differences would materially affect the consolidated financial     category is adjusted for the amortization of premiums and
statements of the Company.                                             accretion of discounts to maturity. Such amortization and
                                                                       accretion are included in interest income. Realized gains and




                                                                                                                     Marubeni Corporation 2003   63
        losses and declines in fair value judged to be other than                 Goodwill and other intangible assets
        temporary on available-for-sale securities are included in (loss)         Effective April 1, 2002, the Companies adopted Statement of
        gain on investment securities. The average cost of securities             Financial Accounting Standards No. 142,     Goodwill and Other
        sold is used in the determination of realized gains or losses.            Intangible Assets (SFAS142). SF AS142 pr ohibits the amortization
        Interest and dividends on investment securities classified as             of goodwill and intangible assets with indefinite useful lives.
        available-for-sale are included in interest income and dividend           SFAS142 r equires that these assets be reviewed for impairment
        income, respectively.                                                     at least annually. Intangible assets with finite lives will continue
                                                                                  to be amortized over their estimated useful lives. Additionally,
        Inventories                                                               SFAS142 r equires that goodwill included in the carrying value of
        Inventories, which primarily consist of commodities, merchan-
                                                                                  equity method investments no longer be amortized. The
        dise and real estate held for sale, are stated at the lower of cost
                                                                                  Companies test goodwill for impairment using the two-step
        (primarily specific or moving average cost) or market (generally
                                                                                  process prescribed in SFAS142. The first step is a scr een for
        replacement cost). Inventories included real estate for sale of
                                                                                  potential impairment, while the second step measures the
        ¥115,140 million ($959,500 thousand) and ¥131,836 million at
                                                                                  amount of the impairment, if any.
        March 31, 2003 and 2002, respectively.
                                                                                  Guarantees
        Investments                                                               Effective on January 1, 2003, the Companies adopted the
        The Companies’ investments in affiliated companies are stated at
                                                                                  Financial Accounting Standards Board (“FASB”) Interpretation
        cost, adjusted for equity in their undistributed earnings or
                                                                                  (“Interpretation”) No.45, Guarantor’s Accounting and Disclosure
        accumulated losses since acquisition. Other investments are
                                                                                  Requirements for Guarantees, Including Indirect Guarantees of
        stated at cost, adjusted for any declines in value judged to be
                                                                                  Indebtedness of Others. As a result of adopting Interpretation
        other than temporary.
                                                                                  No.45, the Companies r ecognizes, at the inception of a guaran-
        Loans and allowance for doubtful accounts                                 tee, a liability for the fair value of the obligation undertaken in
        Loans including accounts receivable are stated at cost.                   issuing the guarantee, issued or modified after December 31,
           In evaluating the credit risk relating to loans, the Companies         2002, while the previous accounting for guarantees continues to
        categorize them based on the potential exposures for credit               be applied for guarantees issued before January 1, 2003. The
        ratings of debtors, geographical and other considerations.                adoption of Interpretation No.45 did not have a material impact
        When a loan is impaired, the allowance for credit losses is               on the Company’s financial position and results of operations.
        determined based on discounted cash flows using the loans’
                                                                                  Trading transactions and revenue recognition
        initial effective interest rate or the fair value of the collateral for
                                                                                  The trading transactions undertaken by the Companies take
        certain collateral dependent loans. For other loans, the allow-
                                                                                  many forms and consist of those in which the Companies act as
        ance for credit losses is determined based on a historical bad
                                                                                  principal and those in which the Companies act as agent. In
        debt ratio by the credit risk category. When loans are legally or
                                                                                  agency transactions, payment for goods is made directly by the
        contractually determined to be uncollectible, the loans are offset
                                                                                  purchaser to the supplier. The total volume of trading transac-
        against their respective allowances.
                                                                                  tions includes the sales value of all transactions in which the
           Cash received on impaired loans is either applied against the
                                                                                  Companies participate, regardless of the form of such transac-
        principal of such loans or reported as interest income, based on
                                                                                  tion, based on the practice of the Japanese trading companies.
        management’s judgment with regard to the collectibility of the
                                                                                  Gross trading profit principally consists of gross profit on sales
        principal. The Companies discontinue the accrual of interest
                                                                                  transactions and commissions on agency transactions. Shipping
        when loans are past due for a period of six months or more. The
                                                                                  and handling costs are included in determining the gross
        accrual of interest is resumed when agreements for rescheduling
                                                                                  trading profit.
        of payment is made and receipt of interest is probable.
                                                                                     In acting as principal, the Companies recognize gross trading
           Loans ninety days past due are noted as delinquent and
                                                                                  profit when the delivery conditions are met. These conditions are
        monitored for collectibility.
                                                                                  considered to have been met when the goods are received by the
        Leases                                                                    customer or title to securities such as bills of lading are trans-
        The Companies leases vessels, buildings and equipment to                  ferred to the customer. In acting as agent, the Companies
        customers and other third parties. Finance leases are included in         recognize gross trading profit when contracted services are fully
        current and non-current accounts receivable in the consolidated           rendered to the customers.
        balance sheet. Operating leases are presented separately as
                                                                                  Other income (expenses)
        property leased to others in the consolidated balance sheet.
                                                                                  Other-net in other income (expenses) includes losses incurred in
        Depreciation                                                              liquidating subsidiaries and affiliated companies of ¥12,542
        Depreciation of property and equipment (including property                million ($104,517 thousand), ¥16,669 million and ¥9,233 million
        leased to others) is determined by the declining-balance or the           for the years ended March 31, 2003, 2002 and 2001, respectively.
        straight-line method (primarily for buildings) at rates based on
                                                                                  Derivative instruments and hedging activities
        the estimated useful lives of the respective assets, which are from
                                                                                  Effective April 1, 2001, the Companies adopted Statement No.
        2 to 50 years.
                                                                                  133 of Financial Accounting Standards Board (FASB), Accounting
        Long-lived assets other than goodwill and                                 for Derivative Instruments and Hedging Activities (SFAS 133), as
        other intangible assets                                                   amended. SFAS133 r equires the Companies to recognize all
        Long-lived assets held and used are evaluated for impairment              derivative instruments on the consolidated balance sheet at fair
        and written down to their fair value if the sum of their expected         value. Derivatives that are not hedges must be adjusted to fair
        future cash flows is less than the carrying amount of the assets.         value through income. If the derivative is a hedge, depending on
        Long-lived assets to be disposed of are reported at the lower of          the nature of the hedge, changes in the fair value of derivatives
        the carrying amount or fair value less cost to sell.                      will either be offset against the change in value of the hedged




64   Marubeni Corporation 2003
assets, liabilities, or firm commitments through earnings or                                      actual export and import transactions or receipts and payments
recognized in other comprehensive income until the hedged item                                    of interest. The maximum length of time over which the
is recognized in earnings. The ineffective portion of the change in                               Companies are hedging its exposure to the variability in future
fair value of a hedge will be immediately recognized in earnings.                                 cash flows for forecasted transactions excluding those forecasted
For derivative and non-derivative financial instruments desig-                                    transactions related to the payments of variable interest on
nated as hedging the foreign currency exposure of a net invest-                                   existing financial instruments is 16 months.
ment in foreign subsidiaries and affiliates, the gain or loss is
reported in other comprehensive income as part of the cumula-
                                                                                                  Earnings/loss per 100 shares of common
tive translation adjustment to the extent the hedges are effective.
                                                                                                  stock
                                                                                                  The computation of basic earnings or loss per 100 shares of
Gains and losses related to the hedge ineffective portion and
                                                                                                  common stock is based on the weighted average number of
related to the portion of hedging instruments excluded from the
                                                                                                  shares of common stock outstanding during the year. The
assessment of hedge effectiveness are included in other income
                                                                                                  computation of diluted earnings or loss per share is based on the
(expenses) – net. The Companies expects to reclassify ¥1,413
                                                                                                  weighted average number of shares of common stock outstand-
million ($11,775 thousand) of net losses on derivative instru-
                                                                                                  ing plus any potentially dilutive securities. For additional
ments from accumulated other comprehensive income to
                                                                                                  disclosures regarding convertible debentures, refer to Note 8.
earnings during the 12 months ending March 31, 2004, due to

   The following table sets forth the computation of basic and diluted earnings/loss per 100 shares:
                                                                                                                                                         Thousands of
                                                                                                             Millions of Yen                              U.S. Dollars
                                                                                                2003              2002                2001                   2003

Numerator:
   Net income (loss) (numerator for
    basic earnings (loss) per 100 shares) ........................................ ¥              30,312     ¥     (116,418)   ¥         15,036            $252,600
   Effect of dilutive securities:
      Convertible debentures ...........................................................               333                 –                 407               2,775
   Numerator for diluted earnings (loss) per 100 shares ............ ¥                            30,645     ¥     (116,418)   ¥         15,443            $255,375
Denominator:
  Denominator for basic earnings (loss) per 100 shares –
    weighted average shares ...........................................................     1,493,495,279     1,493,990,899        1,494,018,855
Effect of dilutive securities:
  Convertible debentures ...............................................................     123,151,564                   –        148,869,326
   Denominator for diluted earnings (loss) per 100 shares –
    adjusted weighted average shares and
    assumed conversions .................................................................   1,616,646,843     1,493,990,899        1,642,888,181

                                                                                                                     Yen                                  U.S. Dollars

Basic earnings (loss) per 100 shares ...............................................              ¥2,030            ¥(7,792)             ¥1,006               $16.92
Diluted earnings (loss) per 100 shares ...........................................                ¥1,896            ¥(7,792)             ¥ 940                $15.80


   The convertible debentures issued in 1986 and redeemed in                                      (“SFAS 143”), which is effective for fiscal years beginning after
2001 with a rate of 2.1%, issued in 1988 and redeemed in 2000                                     June 15, 2002. SFAS 143 requires legal obligations associated
with a rate of 2.0% and issued in 1996 with a rate of 0.85% were                                  with the retirement of long-lived assets to be recognized at
dilutive for the year ended March 31, 2001. Convertible deben-                                    their fair value at the time that the obligations are incurred.
tures were antidilutive for the years ended March 31, 2002. The                                   Upon initial recognition of a liability, that cost should be
convertible debentures issued in 1996 with a rate of 0.85% were                                   capitalized as part of the related long-lived asset and allocated
dilutive for the year ended March 31, 2003.                                                       to expense over the useful life of the asset. The Companies will
                                                                                                  adopt SFAS 143 on April 1, 2003, and, based on current
Recently issued accounting standards                                                              circumstances, does not believe that the impact of adoption of
In June 2001, FASB issued Statement of Financial Accounting
                                                                                                  SFAS 143 will have a material impact on the Company’s
Standards No. 143, Accounting for Asset Retirement Obligations
                                                                                                  financial position or results of operations.




                                                                                                                                                   Marubeni Corporation 2003   65
        3. Marketable Equity Securities and Debt Securities

        The following is a summary of available-for-sale securities and held-to-maturity securities at March 31, 2003 and 2002:
                                                                                                             Available-for-sale securities
                                                                                                                       Millions of yen
                                                                                       2003                                                                 2002
                                                                            Gross               Gross                                               Gross      Gross
                                                                          Unrealized          Unrealized                                          Unrealized Unrealized
                                                              Cost          Gains              Losses         Fair Value              Cost          Gains     Losses          Fair Value

        Current:
           Corporate bonds ........................ ¥          7,947       ¥         19       ¥     (360)     ¥         7,606     ¥    6,865       ¥     463    ¥    (251)    ¥   7,077
        Non-current:
         Corporate bonds ........................ ¥            7,205       ¥        252       ¥         –     ¥         7,457     ¥ 11,818         ¥     486    ¥    (477)    ¥ 11,827
           Other debt securities .................                   2                 –               (1)                  1                39            –            (1)         38
            Total debt securities ..............              7,207                252                 (1)              7,458       11,857                486         (478)     11,865
           Marketable equity securities ....                124,353             17,068            (28,832)            112,589      161,362             30,406      (27,284)    164,484
              Total ........................................ ¥ 131,560     ¥ 17,320        ¥ (28,833)         ¥ 120,047           ¥173,219         ¥30,892      ¥(27,762)     ¥176,349

                                                                          Thousands of U.S. dollars
                                                                                       2003
                                                                            Gross               Gross
                                                                          Unrealized          Unrealized
                                                              Cost          Gains              Losses         Fair Value

        Current:
          Corporate bonds ........................ $          66,225       $        158    $ (3,000)          $        63,383
        Non-current:
           Corporate bonds ........................ $         60,042       $ 2,100            $         –     $        62,142
           Other debt securities .................                16             –                     (8)                  8
            Total debt securities ..............             60,058              2,100              (8)                62,150
           Marketable equity securities ....              1,036,275            142,234        (240,267)               938,242
              Total ........................................ $1,096,333    $144,334        $(240,275)         $1,000,392

                                                                                                             Held-to-maturity securities
                                                                                                                       Millions of yen
                                                                                       2003                                                                 2002
                                                                            Gross               Gross                                               Gross      Gross
                                                                          Unrealized          Unrealized                                          Unrealized Unrealized
                                                              Cost          Gains              Losses         Fair Value              Cost          Gains     Losses          Fair Value

        Current:
           Corporate bonds ........................       ¥    5,502            ¥    59       ¥         –         ¥     5,561     ¥ 56,121         ¥       1    ¥       (2)   ¥ 56,120
        Non-current:
         Corporate bonds ........................         ¥ 46,120              ¥ 173         ¥ (3,398)           ¥ 42,895        ¥ 58,484         ¥      22    ¥ (5,878)     ¥ 52,628

                                                                          Thousands of U.S. dollars
                                                                                       2003
                                                                            Gross               Gross
                                                                          Unrealized          Unrealized
                                                              Cost          Gains              Losses         Fair Value

        Current:
          Corporate bonds ........................        $45,850               $492          $         –         $46,342
        Non-current:
           Corporate bonds ........................       $384,333              $1,442        $(28,317)           $357,458




66   Marubeni Corporation 2003
   In addition to the securities listed above, the Companies held                                                        The Company contributed certain available-for-sale securities
trading securities of ¥182 million ($1,517 thousand) and ¥751                                                         to an employee retirement benefit trust at fair value of ¥8,746
million, which are equal to their fair value, as of March 31, 2003                                                    million ($72,883 thousand) and recognized a loss of ¥1,611
and 2002, respectively. The net unrealized holding losses on                                                          million ($13,425 thousand), which is included in loss on invest-
trading securities included in earnings for the years ended                                                           ment securities for the year ended March 31, 2003.
March 31, 2003, 2002 and 2001 amounted to ¥5 million ($42                                                                The Companies wrote down certain investment securities
thousand), ¥75 million and ¥40 million, respectively.                                                                 whose decline in value was considered to be other than tempo-
   The proceeds from sales of available-for-sale securities                                                           rary to their fair value. These write-downs amounted to ¥23,699
amounted to ¥23,984 million ($199,867 thousand), ¥31,370 million                                                      million ($197,492 thousand) and ¥77,820 million for the years
and ¥88,515 million for the years ended March 31, 2003, 2002 and                                                      ended March 31, 2003 and 2002.
2001, respectively. Gross realized gains on sales of available-for-                                                      The amortized cost and estimated fair value of debt and
sale securities totaled ¥9,356 million ($77,967 thousand), ¥13,274                                                    marketable equity securities at March 31, 2003 are summarized by
million and ¥26,559 million, and gross realized losses totaled                                                        contractual maturity below. Expected maturities may differ from
¥846 million ($7,050 thousand), ¥2,892 million and ¥1,349 million                                                     contractual maturities because the issuers of certain securities have
for the years ended March 31, 2003, 2002 and 2001, respectively.                                                      the right to prepay obligations without prepayment penalties.

                                                                                                                                           Available-for-sale securities
                                                                                                                            Cost           Fair Value                 Cost              Fair Value
                                                                                                                                Millions of yen                       Thousands of U.S. dollars

Due in one year or less .......................................................................                        ¥     3,643          ¥ 3,586              $      30,358         $    29,883
Due after one year through five years .............................................                                          9,882            9,708                     82,350              80,900
Due after five years ............................................................................                            1,629            1,770                     13,575              14,750
    Total debt securities .......................................................................                           15,154                15,064               126,283             125,533
Marketable equity securities .............................................................                                 124,353           112,589              1,036,275                938,242
    Total       ..............................................................................................         ¥139,507             ¥127,653             $1,162,558            $1,063,775

                                                                                                                                           Held-to-maturity securities
                                                                                                                            Cost           Fair Value                 Cost              Fair Value
                                                                                                                                Millions of yen                       Thousands of U.S. dollars

Due in one year or less .......................................................................                        ¥     5,502          ¥ 5,561              $      45,850         $    46,342
Due after one year through five years .............................................                                         36,785           34,819                    306,541             290,158
Due after five years ............................................................................                            9,335            8,076                     77,792              67,300
    Total       ..............................................................................................         ¥ 51,622             ¥ 48,456             $ 430,183             $ 403,800

4. Affiliated Companies

Investments in and amounts due from affiliated companies at March 31, 2003 and 2002 consisted of the following:
                                                                                                                                                                                      Thousands of
                                                                                                                                                    Millions of yen                    U.S. dollars
                                                                                                                                              2003                    2002                 2003

Investments in equity securities ....................................................................................                       ¥271,847             ¥220,829              $2,265,392
Long-term receivables .....................................................................................................                   92,801               63,115                 773,341
                                                                                                                                            ¥364,648             ¥283,944              $3,038,733

    The financial information of affiliated companies at March 31, 2003 and 2002 and for the years ended March 31, 2003, 2002 and 2001,
is summarized as follows:
                                                                                                                                                                                      Thousands of
                                                                                                                                                    Millions of yen                    U.S. dollars
                                                                                                                                              2003                   2002                  2003

Total assets ........................................................................................................................     ¥3,479,882           ¥4,268,927             $28,999,017
Total liabilities ..................................................................................................................       2,855,211            3,686,526              23,793,425
Net assets ..........................................................................................................................     ¥ 624,671             ¥ 582,401             $5,205,592

                                                                                                                                                                                      Thousands of
                                                                                                                                         Millions of yen                               U.S. dollars
                                                                                                                           2003               2002                   2001                  2003

Net sales ...............................................................................................           ¥5,840,322            ¥4,552,961           ¥3,084,618             $48,669,350
Net income ...........................................................................................                  58,711                 2,425               43,169                 489,258



                                                                                                                                                                                 Marubeni Corporation 2003   67
            The Company’s sales to and purchases from affiliated companies for the years ended March31, 2003, 2002 and 2001 wer e as follows:
                                                                                                                                                                                      Thousands of
                                                                                                                                                  Millions of yen                      U.S. dollars
                                                                                                                                    2003               2002              2001             2003

        Sales ......................................................................................................             ¥458,504            ¥421,275          ¥445,241        $3,820,867
        Purchases .............................................................................................                    442,467            555,948           608,587         3,687,225


           The unamortized balance of the difference between the cost of                                                        companies are marketable equity securities, which have carrying
        investment in affiliated companies and the Company’s equity in                                                          values of ¥41,162 million ($343,017 thousand) and ¥26,151
        the net assets at the dates of acquisition amounted to ¥8,434                                                           million at March 31, 2003 and 2002, respectively, with corre-
        million ($70,283 thousand) at March 31, 2003. The difference was                                                        sponding aggregate quoted market values of ¥39,336 million
        not significant at March 31, 2002.                                                                                      ($327,800 thousand) and ¥20,340 million.
           Certain investments in the common stock of affiliated

        5. Loans and Allowance for Doubtful Accounts

        The changes in the allowance for doubtful accounts are summarized as follows:
                                                                                                                                                                                      Thousands of
                                                                                                                                                  Millions of yen                      U.S. dollars
                                                                                                                                    2003               2002              2001             2003

        Balance at beginning of year .............................................................                               ¥149,554            ¥129,726          ¥142,012        $1,246,283
          Provision ..........................................................................................                      5,660              43,936            37,916            47,167
          Charge-offs ......................................................................................                       (7,999)            (19,538)          (51,304)          (66,658)
            Other ................................................................................................                   (4,685)            (4,570)            1,102           (39,042)
        Balance at end of year ........................................................................                          ¥142,530            ¥149,554          ¥129,726        $1,187,750


           At March 31, 2003 and 2002, the recorded investments in loans                                                        31, 2003, 2002 and 2001, respectively. The Companies generally
        that are considered to be impaired under SFAS1 14 were ¥295,065                                                         recognize interest income on impaired loans on a cash basis,
        million ($2,458,875 thousand) and ¥307,602 million, respectively,                                                       which was not significant for the years ended March 31, 2003,
        and the allowance for credit losses related to those loans were                                                         2002 and 2001.
        ¥126,577 million ($1,054,808 thousand) and ¥130,990 million,                                                               The recorded investment in loans on nonaccrual status was
        respectively. The recorded investment in the impaired loans, net                                                        ¥131,581 million ($1,096,508 thousand) at March 31, 2003, and the
        of the valuation allowance, is either secured by collateral or                                                          recorded investment in loans past due of ninety days and still
        believed to be collectible. The average recorded investments in                                                         accruing interest was not significant at March 31, 2003.
        impaired loans were ¥300,570 million ($2,504,750 thousand),                                                                The aggregated amount of losses on sales of loans was ¥1,790
        ¥269,583 million and ¥214,609 million for the years ended March                                                         million ($14,917 thousand) for the year ended March 31, 2003.

        6. Long-Lived Assets and Goodwill

        The gross carrying amounts and accumulated amortization of intangible assets as of March 31, 2003 are as follows:
                                                                                                                                                                    Millions of yen
                                                                                                                                                       Gross
                                                                                                                                                      carrying        Accumulated         Net book
                                                                                                                                                      amount          amortization         value

        Amortized intangible assets:
            Mining and operating rights ......................................................................................                        ¥32,080          ¥(10,532)          ¥21,548
            Software ........................................................................................................................          19,361           (10,611)            8,750
            Additional minimum liability ...................................................................................                            4,720            (1,688)            3,032
         Other .............................................................................................................................             9,481            (4,323)            5,158
        Unamortized intangible assets:
         Land rent rights ...........................................................................................................                    2,953                  –            2,953
            Other .............................................................................................................................            795                  –                795
                                                                                                                                                      ¥69,390          ¥(27,154)          ¥42,236




68   Marubeni Corporation 2003
                                                                                                                                                                        Thousands of U.S. dollars
                                                                                                                                                       Gross
                                                                                                                                                      carrying                 Accumulated            Net book
                                                                                                                                                      amount                   amortization            value

Amortized intangible assets:
 Mining and operating rights ......................................................................................                                  $267,334                   $(87,767)             $179,567
   Software ........................................................................................................................                   161,342                     (88,425)                72,917
   Additional minimum liability ...................................................................................                                     39,333                     (14,066)                25,267
   Other .............................................................................................................................                  79,008                     (36,025)                42,983
Unamortized intangible assets:
 Land rent rights ...........................................................................................................                            24,608                          –                 24,608
 Other .............................................................................................................................                      6,625                          –                  6,625
                                                                                                                                                     $578,250                   $(226,283)            $351,967

    The amount of the residual value of the amortized intangible assets is not significant.

  The amortization expense of intangible assets was ¥7,263 million ($60,525 thousand) for the year ended March 31, 2003. The estimated
amortization expense for the next five years is as follows:
                                                                                                                                                                                                     Thousands of
For the year ending March 31                                                                                                                                                    Millions of yen       U.S. dollars

   2004 ...........................................................................................................................................................                 ¥6,196                $51,633
   2005 ...........................................................................................................................................................                  5,335                 44,458
   2006 ...........................................................................................................................................................                  3,817                 31,808
   2007 ...........................................................................................................................................................                  2,698                 22,483
   2008 ...........................................................................................................................................................                  1,826                 15,217

    The changes in the carrying amount of goodwill for the year ended March 31, 2003, are as follows:
                                                                                                                                                                                                     Thousands of
                                                                                                                                                                                Millions of yen       U.S. dollars

Balance at beginning of year ......................................................................................................................                                ¥17,393            $144,941
Goodwill acquired during the year ..........................................................................................................                                         8,555              71,292
Impairment losses ........................................................................................................................................                          (2,050)            (17,083)
Effect of exchange rate and other ..............................................................................................................                                      (345)                (2,875)
Balance at end of year .................................................................................................................................                           ¥23,553            $196,275


   As a result of decreases in the estimated future cash flows due                                                      of ¥200 million ($1,667 thousand) and ¥1,850 million ($15,417
to the worsened business circumstance and conditions and                                                                thousand), respectively, for the year ended March 31, 2003. The
changes in the operating styles, the companies recognized                                                               fair value of the reporting unit was estimated using the expected
impairment losses of ¥2,050 million ($17,083 thousand) in the                                                           present value of future cash flows.
Transportation and industrial machinery and Chemical segments

   The reconciliation of net income (loss) and earnings (loss) per 100 shares from reported amounts to amounts adjusted for amortiza-
tion made in the prior years is as follows:

                                                                                                            Millions of yen                                                    Thousands of U.S. dollars
                                                                                            2003                   2002                    2001                         2003             2002              2001

Reported net income (loss) .............................                                 ¥30,312              ¥(116,418)                 ¥15,036                      $252,600        $(970,150)      $125,300
   Add back: Goodwill amortization ............                                                    –                 1,613                    802                              –          13,442            6,683
Adjusted net income (loss) .............................                                 ¥30,312              ¥(114,805)                 ¥15,838                      $252,600        $(956,708)      $131,983

                                                                                                                    Yen                                                               U.S. dollars
                                                                                            2003                   2002                    2001                         2003             2002              2001

Basic earnings-per-share:
   Reported earnings (loss) per 100 shares ...                                           ¥ 2,030              ¥ (7,792)                  ¥ 1,006                      $ 16.92         $ (64.93)       $      8.38
     Goodwill amortization ...........................                                         –                   108                        54                            –             0.90               0.45
   Adjusted earnings (loss) per 100 shares ...                                           ¥ 2,030              ¥ (7,684)                  ¥ 1,060                      $ 16.92         $ (64.03)       $      8.83




                                                                                                                                                                                              Marubeni Corporation 2003   69
                                                                                                                         Yen                                                        U.S. dollars
                                                                                                  2003                  2002                       2001               2003               2002               2001

        Diluted earnings-per-share:
          Reported earnings (loss) per 100 shares ...                                          ¥ 1,896              ¥ (7,792)                  ¥     940            $ 15.80          $ (64.93)          $     7.83
             Goodwill amortization ...........................                                       –                   108                          49                  –              0.90                 0.41
           Adjusted earnings (loss) per 100 shares ...                                         ¥ 1,896              ¥ (7,684)                  ¥     989            $ 15.80          $ (64.03)          $     8.24

           Due to decreases in expected future cash flows below their                                                        equipment on the consolidated statement of operations, for the
        carrying amounts, the Company and certain of its subsidiaries                                                        year ended March 31, 2002. The segment affected by the
        recognized impairment losses primarily on their commercial and                                                       impairment losses was primarily Development and construction.
        residential real estate leased to others in the total amount of                                                      The amount of impairment losses for the year ended March 31,
        ¥41,835 million, which is included in gain (loss) on property and                                                    2003 was immaterial.

        7. Pledged Assets

        The following table summarizes assets pledged as collateral for the Company’s obligations at March 31, 2003 and 2002:
                                                                                                                                                                                                   Thousands of
                                                                                                                                                               Millions of yen                      U.S. dollars
                                                                                                                                                            2003                  2002                  2003

        Time deposits ...................................................................................................................                  ¥ 1,164            ¥    1,419            $        9,700
        Investment securities, securities and other investments and investments in
         affiliated companies ......................................................................................................                         94,073            164,106                 783,942
        Notes, loans and accounts receivable – trade (current and non-current) ...............                                                               22,357             37,080                 186,308
        Inventories ........................................................................................................................                 26,683             28,184                 222,358
        Property leased to others, net of accumulated depreciation .....................................                                                     20,179             19,794                 168,158
        Property and equipment, net of accumulated depreciation .....................................                                                       139,910            177,209               1,165,917
        Other assets ......................................................................................................................                   3,937              8,682                  32,809
                                                                                                                                                           ¥308,303           ¥436,474              $2,569,192

            The obligations secured by such collateral were as follows:
                                                                                                                                                                                                    Thousands of
                                                                                                                                                               Millions of yen                       U.S. dollars
                                                                                                                                                             2003                 2002                      2003

        Short-term loans ..............................................................................................................                     ¥19,444           ¥26,641                   $162,033
        Other current assets .........................................................................................................                        3,760                  –                    31,333
        Long-term debt ................................................................................................................                      56,581            116,114                   471,508
        Financial guarantees .......................................................................................................                              –             24,794                         –
        Guarantees of contracts, etc. ..........................................................................................                              7,546              8,174                    62,884
                                                                                                                                                            ¥87,331           ¥175,723                  $727,758


           In addition, acceptances payable at March 31, 2003 and 2002 were                                                  proceeds from the sales of such inventories covered by outstanding
        secured by trust receipts on inventories, the standard terms of which                                                trust receipts.
        provide that the proceeds from the sales of any such collateral be                                                       As is customary in Japan, security, if requested by a lending
        delivered to the respective bank to be applied against outstanding                                                   bank, must be given and the bank has the right to offset cash
        acceptances. However, the Companies has, in general, followed the                                                    deposited with it against any debt or obligations that become due
        practice of paying acceptances on their maturity dates. Given the                                                    and, in the case of default or certain other specified events, against
        substantial volume of the Company’s transactions, it would not be                                                    all debt payable to the bank. To date, no such request has been
        practicable to determine the total amount of inventories and/or                                                      made to the Companies and no such rights have been exercised.

        8. Short-Term Loans and Long-Term Debt

        Short-term loans at March 31, 2003 and 2002 consisted of:
                                                                                                                                                                                                   Thousands of
                                                                                                                                                               Millions of yen                      U.S. dollars
                                                                                                                                                            2003                  2002                  2003

           Short-term loans from banks and others .................................................................                                        ¥548,439           ¥719,254              $4,570,325
           Commercial paper .......................................................................................................                          12,700                  –                 105,833
                                                                                                                                                           ¥561,139           ¥719,254              $4,676,158

            The weighted average interest rates on short-term loans outstanding at March 31, 2003 and 2002 were 0.63% and 0.60%, respectively.


70   Marubeni Corporation 2003
    Long-term debt at March 31, 2003 and 2002 consisted of:
                                                                                                                                                                               Thousands of
                                                                                                                                               Millions of yen                  U.S. dollars
                                                                                                                                            2003                 2002              2003

4.0% reverse dual currency notes due 2005 .................................................................                             ¥    12,196       ¥      16,491        $   101,633
2.8% notes due 2002 ........................................................................................................                      –              37,500                  –
3.0% notes due 2002 ........................................................................................................                      –              10,000                  –
2.0% notes due 2002 ........................................................................................................                      –              30,000                  –
2.0% notes due 2003 ........................................................................................................                 14,500              14,500            120,833
2.0% notes due 2003 ........................................................................................................                 39,376              39,541            328,133
2.12% notes due 2004 ......................................................................................................                   4,600               4,900             38,333
1.6% notes due 2002 ........................................................................................................                      –              32,137                  –
2.0% notes due 2003 ........................................................................................................                 10,473              10,594             87,275
2.0% notes due 2003 ........................................................................................................                 18,460              18,878            153,833
2.5% notes due 2004 ........................................................................................................                  8,723               9,700             72,692
2.3% notes due 2004 ........................................................................................................                  7,600               7,900             63,333
1.5% notes due 2002 ........................................................................................................                      –              14,100                  –
2.0% notes due 2003 ........................................................................................................                 27,929              28,200            232,742
2.0% notes due 2003 ........................................................................................................                 23,119              23,119            192,658
2.0% notes due 2003 ........................................................................................................                  4,600               4,600             38,333
2.37% notes due 2004 ......................................................................................................                   3,400               4,700             28,333
2.13% notes due 2005 ......................................................................................................                   5,800               8,000             48,333
1.52% notes due 2004 ......................................................................................................                  10,600              11,300             88,333
1.75% notes due 2008 with prepayment options ........................................................                                         4,400               5,000             36,667
1.2% notes due 2004 ........................................................................................................                  8,300               8,700             69,167
1.48% notes due 2006 ......................................................................................................                   3,800               4,200             31,667
1.15% notes due 2005 ......................................................................................................                  36,637              37,047            305,308
1.27% notes due 2006 ......................................................................................................                   7,974              10,000             66,450
1.13% notes due 2006 ......................................................................................................                  28,100              28,100            234,167
0.81% notes due 2004 ......................................................................................................                  27,163              28,100            226,358
Libor + 0.73% notes due 2007 ........................................................................................                        15,578              18,484            129,817
0.85% convertible debentures due 2006 .......................................................................                                64,500              68,890            537,500
Medium-term notes due from 2002 to 2008 principally at rates from 0.1% to
 4.4% or at floating rates ................................................................................................                  45,083           153,098              375,692
Loans from government-owned banks and government agencies:
   Secured, due serially through 2016 principally at rates from 1.1% to 6.7% ........                                                        31,552              77,909            262,933
   Unsecured, due serially through 2016 principally at rates from 0.3% to 6.4% ...                                                          106,242              86,998            885,350
Loans principally from banks and insurance companies:
   Secured, due serially through 2009 principally at rates from 1.5% to 8.0% ........                                                       20,939            38,205               174,492
   Unsecured, due serially through 2017 principally at rates from 0.1% to 8.6% ...                                                       1,577,877         1,556,992            13,148,976
Other ...............................................................................................................................      134,992           128,619             1,124,934
                                                                                                                                         2,304,513         2,576,502            19,204,275
    Less current portion ....................................................................................................              402,186           528,048             3,351,550
                                                                                                                                        ¥1,902,327        ¥2,048,454           $15,852,725

   To hedge against exposure related to the payment of interest                                                       the short-term loans and long-term debt.
and the repayment of the principal of certain short-term loans                                                           The indentures covering the 0.85% convertible debentures due
and long-term debt denominated in foreign currencies, the                                                             2006 issued in November 1996 provide that (1) the holders may
Company and certain of its subsidiaries enter into foreign                                                            convert the debentures into shares of common stock at the
exchange contracts.                                                                                                   conversion price of ¥539 ($4.49), and (2) the debentures are
   To hedge against exposure to changes in interest rates and                                                         redeemable at the option of the Company at prices ranging from
foreign currency exchange rates, the Company and certain of its                                                       100% to 102% of the principal amounts after March 31, 2003.
subsidiaries enter into several interest rate swap agreements,                                                           During the year ended March 31, 2003, the Company entered
including interest rate and currency swap agreements. The                                                             into a long-term line of credit arrangement of ¥152,000 million
interest rate swap agreements primarily change the fixed interest                                                     ($1,266,667 thousand) with a syndicate of certain financial
rates on the principal of certain short-term loans and long-term                                                      institutions and intends to refinance certain short-term loans and
debt into floating interest rates. The floating interest rates are, in                                                current portion of long-term debt when due. Such short-term
general, based upon the six-month or three-month LIBOR                                                                loans and current portion of long-term debt totaling to ¥133,527
(London Interbank Offered Rate). The interest rate swap                                                               million ($1,112,725 thousand) are classified as long-term debt on
agreements are to remain in effect through the maturity dates of                                                      the consolidated balance sheet at March 31, 2003.

                                                                                                                                                                          Marubeni Corporation 2003   71
           Long-term debt subsequent to March 31, 2003 matures as follows:

                                                                                                                                                                                                   Thousands of
        Year ending March 31                                                                                                                                                     Millions of yen    U.S. dollars

           2004 ...........................................................................................................................................................        ¥402,186         $3,351,550
           2005 ...........................................................................................................................................................         448,385          3,736,542
           2006 ...........................................................................................................................................................         595,128          4,959,400
           2007 ...........................................................................................................................................................         221,911          1,849,258
           2008 ...........................................................................................................................................................         139,830          1,165,250
           Thereafter .................................................................................................................................................             497,073          4,142,275

           Certain agreements principally with Government-owned                                                                    Certain of the long-term debt agreements stipulate, among
        financial institutions provide that earlier repayment may be                                                            other things, that the Companies, upon request, submit for the
        required if, in the judgment of the lenders, the Company or                                                             lenders’ approval the proposed appropriations of income,
        certain of its subsidiaries have achieved higher than expected                                                          including dividends, before such appropriations can be submit-
        earnings or received sufficient proceeds from the issuance of                                                           ted to the shareholders. The Companies has never received such
        common stock or debentures to repay its loans. To date, none of                                                         a request.
        the lenders has made such a request.

        9. Employees’ Retirement Benefits

        The Company and certain of its subsidiaries have unfunded                                                               combined welfare pension plan. A larger portion of the total
        lump-sum retirement plans which, in general, cover all employ-                                                          benefits is paid from the combined welfare pension plan than
        ees other than directors. In addition, the Company and certain of                                                       from the lump-sum retirement plan.
        its subsidiaries have contributory and non-contributory funded                                                             The Company contributes to the combined welfare plan
        pension plans with independent trustees covering eligible                                                               amounts which are determined by independent actuaries. The
        employees. Under the terms of the lump-sum retirement plans,                                                            plan assets primarily consist of Japanese government bonds,
        eligible employees are entitled under most circumstances, upon                                                          corporate bonds and marketable equity securities.
        mandatory retirement or earlier voluntary severance, to indem-                                                             During the years ended March 31, 2003 and 2002, the
        nities based on their compensation as of the date of severance                                                          Company contributed ¥22,246 million ($185,383 thousand) and
        and years of service.                                                                                                   ¥5,000 million, respectively, to a trust which was established to
            Effective April 1, 1991, the Company amended its contribu-                                                          provide pension benefits and is legally segregated from the
        tory funded pension plan to combine the plan with the pension                                                           Company. This contribution was made to improve the funding
        benefits normally provided under the Welfare Pension Insurance                                                          of the benefit plans.
        Law of Japan. The combined welfare pension plan, in general,                                                               For the year ended March 31, 2003, the Company applied to
        covers all employees and provides for pension payments for life                                                         the Japanese government for introduction of a cash balance plan
        commencing at age 60 or lump-sum payments upon severance.                                                               and reduction of retirement benefits for certain employees
            At retirement, the Company’s employees are entitled to                                                              effective April 1, 2003.
        benefits from both the lump-sum retirement plan and the


          The reconciliation of beginning and ending balances of the projected benefit obligation and plan assets, and the funded status of the
        Company’s and certain subsidiaries’ plans are as follows:
                                                                                                                                                                                                   Thousands of
                                                                                                                                                                      Millions of yen               U.S. dollars
                                                                                                                                                                 2003                   2002           2003

        Change in projected benefit obligation
        Projected benefit obligation at beginning of year .......................................................                                            ¥252,218              ¥248,238         $2,101,816
           Service cost ...................................................................................................................                       8,417                 10,165          70,142
           Interest cost ..................................................................................................................                       7,371                  7,380          61,425
           Actuarial losses ............................................................................................................                         19,139                  2,066         159,492
           Foreign currency exchange rate changes .................................................................                                              (1,221)                  1,599        (10,175)
           Benefits paid .................................................................................................................                      (17,779)                (17,511)      (148,158)
           Plan amendment ..........................................................................................................                            (23,877)                    281       (198,975)
        Projected benefit obligation at end of year ..................................................................                                         244,268              252,218          2,035,567




72   Marubeni Corporation 2003
                                                                                                                                                                               Thousands of
                                                                                                                                             Millions of yen                    U.S. dollars
                                                                                                                                         2003                  2002                 2003

Change in plan assets
Fair value of plan assets at beginning of year .............................................................                            228,890               227,623             1,907,417
  Actual return on plan assets ......................................................................................                   (11,724)               (8,077)              (97,700)
  Foreign currency exchange rate changes .................................................................                               (1,102)                1,567                (9,183)
  Employees’ contributions ...........................................................................................                      706                   787                 5,883
  Employer’s contribution .............................................................................................                  26,082                15,887               217,350
  Benefits paid .................................................................................................................        (9,909)               (8,897)              (82,575)
Fair value of plan assets at end of year ........................................................................                       232,943               228,890             1,941,192
Funded status ...................................................................................................................       (11,325)              (23,328)              (94,375)
Unrecognized net transition obligation being recognized over 15 years ................                                                      622                 1,243                 5,183
Unrecognized prior service cost ....................................................................................                    (18,417)                5,123              (153,475)
Unrecognized net loss .....................................................................................................             138,303               101,135             1,152,525
Net amount recognized ..................................................................................................               ¥109,183           ¥ 84,173              $ 909,858
Amounts recognized in the consolidated balance sheet consist of:
 Prepaid benefit cost – current ....................................................................................                   ¥ 1,642            ¥        859          $     13,683
 Prepaid benefit cost – noncurrent .............................................................................                        113,005                 93,829               941,708
 Accrued benefit liability .............................................................................................                 (9,571)               (12,893)              (79,758)
 Intangible assets ..........................................................................................................             3,032                  1,999                25,267
 Accumulated other comprehensive income, before tax ........................................                                              1,075                    379                 8,958
Net amount recognized ..................................................................................................               ¥109,183           ¥ 84,173              $ 909,858

  The components of net pension expense of the Company’s and certain subsidiaries’ plans for the years ended March 31, 2003, 2002
and 2001 were as follows:
                                                                                                                                                                                 Thousands of
                                                                                                                                     Millions of yen                              U.S. dollars
                                                                                                                        2003              2002                  2001                  2003

Service cost – benefits earned during the year ...............................                                        ¥8,417            ¥10,165               ¥10,375               $70,142
Interest cost on projected benefit obligation ...................................                                       7,371             7,380                 7,197                 61,425
Expected return on plan assets .........................................................                               (7,782)           (7,579)               (4,882)               (64,850)
Net amortization and deferrals ........................................................                                 4,580             5,227                 5,434                 38,166
Employees’ contributions ..................................................................                              (706)             (787)                 (899)                (5,883)
Net pension expense ..........................................................................                        ¥11,880           ¥14,406               ¥17,225               $99,000

   The aggregate projected benefit obligation and aggregate fair value of plan assets for pension plans with projected benefit obligations
in excess of plan assets are as follows:
                                                                                                                                                                               Thousands of
                                                                                                                                             Millions of yen                    U.S. dollars
                                                                                                                                         2003                  2002                 2003

Aggregate projected benefit obligation ........................................................................                        ¥243,738           ¥251,830              $2,031,150
Aggregate fair value of plan assets ...............................................................................                     232,406            228,375               1,936,717

  The aggregate accumulated benefit obligation and aggregate fair value of plan assets for pension plans with accumulated benefit
obligations in excess of plan assets are as follows:
                                                                                                                                                                                Thousands of
                                                                                                                                             Millions of yen                     U.S. dollars
                                                                                                                                          2003                  2002                  2003

Aggregate accumulated benefit obligation ..................................................................                             ¥20,287               ¥30,635               $169,058
Aggregate fair value of plan assets ...............................................................................                      10,716                17,742                 89,300

   The discount rates and weighted average rates of increases in future salary levels used in determining the actuarial present value of
the projected benefit obligation and the expected long-term rates of return on plan assets for the years ended March 31, 2003, 2002 and
2001 were as follows:
                                                                                                                                           2003                  2002                  2001

Discount rates ...................................................................................................................         2.5%                  3.0%                  3.0%
Weighted average rates of increases in future salary levels ......................................                                         3.3%                  3.3%                  3.4%
Expected long-term rates of return on plan assets .....................................................                                    3.0%                  3.0%                  3.5%

                                                                                                                                                                          Marubeni Corporation 2003   73
        10. Income Taxes

        Effective the year ended March 31, 2003, the Company adopted the new the Japanese tax regulations allowing the Company to file a
        consolidated tax return.
           The significant components of deferred tax assets and deferred tax liabilities at March31, 2003 and 2002 wer e as follows:
                                                                                                                                                                                     Thousands of
                                                                                                                                                        Millions of yen               U.S. dollars
                                                                                                                                                      2003                2002           2003

        Deferred tax assets:
          Allowance for doubtful accounts ..............................................................................                          ¥    82,985        ¥101,365         $ 691,542
            Inventories ....................................................................................................................           7,468               6,924          62,233
            Investment securities ..................................................................................................                  52,574              37,748         438,117
            Employees’ retirement benefits .................................................................................                           5,892               6,432          49,100
            Unrealized profit .........................................................................................................               14,331              14,999         119,425
            Investments in affiliated companies .........................................................................                             20,055              32,332         167,125
            Net operating loss carryforwards .............................................................................                            28,255              29,149         235,458
            Other .............................................................................................................................       27,432              17,266         228,600
        Total deferred tax assets .................................................................................................                238,992            246,215          1,991,600
        Valuation allowance ........................................................................................................               (28,284)           (45,371)          (235,700)
        Net deferred tax assets ....................................................................................................               210,708            200,844          1,755,900


        Deferred tax liabilities:
          Property and equipment ............................................................................................                         21,675              11,440         180,625
            Undistributed earnings ..............................................................................................                      3,923               2,797          32,692
            Other .............................................................................................................................        6,137               6,844          51,141
        Total deferred tax liabilities ...........................................................................................                    31,735              21,081         264,458
        Net deferred tax assets ....................................................................................................              ¥178,973           ¥179,763         $1,491,442


           The net changes in the valuation allowance for deferred tax                                                          by ¥4,201 million ($35,008 thousand) to reflect the revised rates.
        assets were ¥17,087 million ($142,392 thousand) of decrease and                                                            Realization of the Company’s net deferred tax assets is depen-
        ¥22,526 million of increase for the years ended March 31, 2003                                                          dent on the Company generating sufficient taxable income or the
        and 2002, respectively.                                                                                                 Company executing certain available tax strategies. Although
           At March 31, 2003, the Company and certain of its subsidiaries                                                       realization is not assured, management believes it is more likely
        have net operating loss carryforwards of ¥116,948 million                                                               than not that the net deferred tax assets will be realized.
        ($974,567 thousand), of which ¥103,643 million ($863,692                                                                   Taxes on income applicable to the Company would normally
        thousand) will expire through 2022, and ¥13,305 million                                                                 result in a statutory tax rate of approximately 44% (including a
        ($110,875 thousand) has no expiration date.                                                                             temporary surtax of 2%) and 42% for the years ended March 31,
           During March 2003, new tax legislation was enacted in Japan                                                          2003 and 2002, respectively. A reconciliation of the statutory
        which will reduce the Company’s and its domestic subsidiaries’                                                          income tax rate to the effective income tax rates expressed as a
        statutory income tax rate from 42% to 41% for fiscal years ending                                                       percentage of income (loss) before income taxes and equity in
        after March 31, 2004. Deferred income tax balances have decreased                                                       earnings (losses) of affiliated companies is as follows:

                                                                                                                                                       2003                 2002            2001

        Statutory income tax rate ................................................................................................                     44.0%               (42.0)%          42.0%
        Tax effect of subsidiaries’ operations ...........................................................................                             28.8                 11.7            88.0
        Tax effect of permanent differences ..............................................................................                              6.5                  0.2             3.4
        Difference in tax rates of foreign subsidiaries .............................................................                                 (15.1)                (0.8)          (31.5)
        Tax effect on undistributed earnings of subsidiaries and other ...............................                                                (23.5)               (12.8)           18.6
        Effect of tax rate change ..................................................................................................                   12.7                  –               –
        Other ...............................................................................................................................          (4.3)                 2.7             7.0
        Effective income tax rates ...............................................................................................                     49.1%               (41.0)%         127.5%




74   Marubeni Corporation 2003
    Total income taxes recognized for the years ended March 31, 2003, 2002 and 2001 are applicable to the following:
                                                                                                                                                                        Thousands of
                                                                                                                                Millions of yen                          U.S. dollars
                                                                                                                    2003             2002              2001                 2003

Income (loss) before income taxes and equity in earnings (losses)
 of affiliated companies .....................................................................                    ¥16,274          ¥(67,674)          ¥8,526              $135,616
Equity in earnings (losses) of affiliated companies .......................                                         6,486            (8,404)           (1,064)              54,050
Other comprehensive income ...........................................................                             (6,403)           10,693             1,570              (53,358)
Total income taxes ..............................................................................                 ¥16,357          ¥(65,385)          ¥9,032              $136,308

   No provision has been made for Japanese income taxes on the                                                 31, 2003 and 2002, respectively. The Company considers such
undistributed earnings of the Company’s domestic subsidiaries                                                  earnings to be permanently invested. Determination of the
earned prior to March 31, 1993 or on the undistributed earnings                                                amount of the related unrecognized deferred income tax liability
of the Company’s foreign subsidiaries which amounted to                                                        is not practicable.
¥98,635 million ($821,958 thousand) and ¥86,646 million at March

11. Shareholders’ Equity

The amount of retained earnings available for dividends under                                                  cash dividends and other distributions from retained earnings
the Japanese Commercial Code (the “JCC”) is based on the                                                       paid by the Company be appropriated as a legal reserve to the
amount recorded on the Company’s books maintained in                                                           extent that the total amount of additional paid-in capital and
accordance with Japanese accounting practices. The adjustments                                                 the legal reserve equals 25% of the common stock. The
included in the accompanying consolidated financial statements                                                 amounts of additional paid-in capital and the legal reserve
but not recorded on the books, as explained in Note 1, have no                                                 were ¥57,478 million ($478,983 thousand) and zero at March
effect on the determination of retained earnings available for                                                 31, 2003, respectively.
dividends under the JCC.                                                                                          At the June 26, 2002 shareholders’ meeting of the Company,
   Under the JCC, the amount of increased net assets due to the                                                the shareholders approved a proposal to eliminate the
unrealized gains is deducted from the net assets used in                                                       Company’s accumulated deficit of ¥148,072 million ($1,233,933
determining retained earnings available for dividends. There                                                   thousand) by an adjustment to the additional paid-in capital of
was no such an amount included in the retained earnings at                                                     ¥129,228 million ($1,076,900 thousand) and legal reserve ¥18,844
March 31, 2003.                                                                                                million ($157,033 thousand), as permitted by the JCC. Since there
   The retained earnings available for dividends amounted to                                                   are no such laws or rules in the United States of America, the
¥5,548 million ($46,233 thousand) at March 31, 2003.                                                           accompanying consolidated financial statements reflect the
   At the conversion price, 119,666,048 shares of common stock                                                 transaction in such a way as permitted under the JCC and
were reserved at March 31, 2003 for conversion of the 0.85%                                                    recorded in its statutory books. The balance of the consolidated
convertible debentures issued in 1996.                                                                         retained earnings (accumulated deficit) at March 31, 2003 would
   Effective October 1, 2001, the Company’s shares had no par                                                  be ¥64,442 million ($537,017 thousand) had the Company not
value, as prescribed by an amendment of the JCC.                                                               eliminated the accumulated deficit.
   The JCC requires that an amount equal to at least 10% of

12. Other Comprehensive Income (Loss)

The amount of income tax expense or benefit allocated to each component of other comprehensive income (loss) for the years ended
March 31, 2003, 2002 and 2001 was as follows:
                                                                                                                                                  Millions of yen
                                                                                                                                   Before-tax     Tax (expense)           Net-of-tax
                                                                                                                                    amount          or benefit             amount

2003
   Unrealized losses on investment securities arising during period ......................                                         ¥(32,115)         ¥13,079              ¥(19,036)
   Less: reclassification adjustments for income included in net income ................                                             17,438           (7,151)               10,287
   Net unrealized loss ......................................................................................................        (14,677)           5,928                (8,749)
   Currency translation adjustments arising during period .....................................                                      (26,053)          (1,199)              (27,252)
   Less: reclassification adjustments for income included in net income ................                                               7,050             (652)                6,398
   Net currency translation adjustments ......................................................................                       (19,003)          (1,851)              (20,854)
   Unrealized losses on derivatives arising during the period .................................                                       (6,966)           2,348                (4,618)
   Less: reclassification adjustments for income included in net income ................                                                 873             (356)                  517
   Net unrealized losses on derivatives ........................................................................                      (6,093)           1,992                (4,101)
   Minimum pension liability adjustment ...................................................................                             (696)             334                  (362)
   Other comprehensive loss ..........................................................................................             ¥(40,469)         ¥6,403               ¥(34,066)




                                                                                                                                                                  Marubeni Corporation 2003   75
                                                                                                                                                     Thousands of U.S. dollars
                                                                                                                                        Before-tax        Tax (expense)          Net-of-tax
                                                                                                                                         amount             or benefit            amount

        2003
          Unrealized losses on investment securities arising during period ......................                                       $(267,625)          $108,992             $(158,633)
           Less: reclassification adjustments for income included in net income ................                                         145,317              (59,592)              85,725
           Net unrealized loss ......................................................................................................    (122,308)             49,400              (72,908)
           Currency translation adjustments arising during period .....................................                                  (217,108)             (9,992)            (227,100)
           Less: reclassification adjustments for income included in net income ................                                           58,750              (5,433)              53,317
           Net currency translation adjustments ......................................................................                   (158,358)            (15,425)            (173,783)
           Unrealized losses on derivatives arising during the period .................................                                   (58,050)             19,567              (38,483)
           Less: reclassification adjustments for income included in net income ................                                            7,275              (2,967)               4,308
           Net unrealized losses on derivatives ........................................................................                  (50,775)             16,600              (34,175)
           Minimum pension liability adjustment ...................................................................                        (5,800)              2,783               (3,017)
           Other comprehensive loss ..........................................................................................          $(337,241)          $53,358              $(283,883)

                                                                                                                                                          Millions of yen
                                                                                                                                        Before-tax        Tax (expense)          Net-of-tax
                                                                                                                                         amount             or benefit            amount

        2002
          Unrealized losses on investment securities arising during period ......................                                        ¥(40,891)          ¥17,136               ¥(23,755)
           Less: reclassification adjustments for losses included in net loss ........................                                     66,100             (27,717)              38,383
           Net unrealized gains ...................................................................................................        25,209             (10,581)              14,628
           Currency translation adjustments arising during period .....................................                                    22,766                (468)              22,298
           Less: reclassification adjustments for losses included in net loss ........................                                      2,826                (987)               1,839
           Net currency translation adjustments ......................................................................                     25,592              (1,455)              24,137
           Effect of change in accounting standard ..................................................................                       2,477              (1,051)               1,426
           Unrealized losses on derivatives arising during the period .................................                                    (6,711)              3,300               (3,411)
           Less: reclassification adjustments for losses included in net loss ........................                                      2,195                (925)               1,270
           Net unrealized losses on derivatives ........................................................................                   (2,039)              1,324                 (715)
           Minimum pension liability adjustment ...................................................................                           (46)                 19                  (27)
           Other comprehensive income ....................................................................................               ¥48,716            ¥(10,693)             ¥38,023

                                                                                                                                                          Millions of yen
                                                                                                                                        Before-tax        Tax (expense)          Net-of-tax
                                                                                                                                         amount             or benefit            amount

        2001
           Unrealized losses on investment securities arising during period ......................                                       ¥(74,870)          ¥30,919               ¥(43,951)
           Less: reclassification adjustments for losses included in net income ..................                                         11,121             (4,738)                6,383
           Net unrealized losses ..................................................................................................       (63,749)             26,181              (37,568)
           Currency translation adjustments arising during period .....................................                                    13,958                (270)              13,688
           Less: reclassification adjustments for gains included in net income ...................                                         (3,259)                (67)              (3,326)
           Net currency translation adjustments ......................................................................                     10,699                (337)              10,362
           Minimum pension liability adjustment ...................................................................                        57,579             (27,414)              30,165
           Other comprehensive income ....................................................................................               ¥4,529             ¥(1,570)              ¥2,959




76   Marubeni Corporation 2003
    The accumulated balance of each component of accumulated other comprehensive loss at March 31, 2003, 2002 and 2001 was as follows:
                                                                                                                Millions of yen
                                                                            Unrealized                                                 Minimum         Accumulated
                                                                           gains (losses)     Currency           Unrealized             pension           other
                                                                           on investment     translation          losses on             liability     comprehensive
                                                                             securities     adjustments          derivatives           adjustment         losses

Balance at March 31, 2000 ...........................................        ¥ 23,326        ¥(86,325)             ¥     –             ¥(30,358)        ¥(93,357)
Change in the period ...................................................      (37,568)         10,362                    –               30,165            2,959
Balance at March 31, 2001 ...........................................         (14,242)        (75,963)                   –                 (193)         (90,398)
Change in the period ...................................................       14,628          24,137                 (715)                 (27)          38,023
Balance at March 31, 2002 ...........................................             386         (51,826)                (715)                (220)         (52,375)
Change in the period ...................................................       (8,749)        (20,854)              (4,101)                (362)         (34,066)
Balance at March 31, 2003 ...........................................        ¥(8,363)        ¥(72,680)             ¥(4,816)            ¥(582)           ¥(86,441)

                                                                                                           Thousands of U.S. dollars
                                                                            Unrealized                                                 Minimum        Accumulated
                                                                           gains (losses)     Currency           Unrealized             pension          other
                                                                           on investment     translation          losses on             liability    comprehensive
                                                                             securities     adjustments          derivatives           adjustment        losses

Balance at March 31, 2002 ...........................................       $    3,216      $(431,884)            $(5,958)              $(1,833)       $(436,459)
Change in the period ...................................................     (72,908)        (173,783)             (34,175)              (3,017)        (283,883)
Balance at March 31, 2003 ...........................................       $(69,692)       $(605,667)            $(40,133)             $(4,850)       $(720,342)

13. Segment Information

The Company’s operating segments by which management                                        Metals and mineral resources: This group produces, processes
evaluates performance and allocates resources are classified in                             and sells nonferrous light metals both domestically and interna-
terms of the nature of the products and services or areas. The                              tionally, in addition to processing and selling raw materials for
segments, by products and services, are managed by the                                      production of steel and light metals internationally.
divisions of the Head Office. Domestic branches and offices, and                            Chemicals: This group handles a wide variety of goods ranging
overseas corporate subsidiaries and branches operate in the                                 from basic chemicals to leading-edge finished products for
respective areas and are independent operating units. Each                                  information technology and bio technology industries for sale in
reportable segment purchases, distributes and markets a wide                                Japan and internationally. Especially, this group focuses on
variety of industrial and consumer goods including raw                                      furthering bolster efficient operations in electric materials, retail,
materials and equipment relating to a multitude of industries                               resource development and environmental area.
and, in addition, provides the related financing, insurance and                             Forest products and general merchandise: Besides selling
other services to these operations primarily on a worldwide                                 rubber products, footwear and housing materials, the group
basis. The Company has twelve segments identified by product                                operates leisure facilities, manufactures and sells raw materials
and service, in addition to its domestic branches and offices, and                          for paper production, paper and paperboard, and takes part in
overseas corporate subsidiaries and branches. Effective for the                             afforestation projects, in Japan and internationally.
year ended March 31, 2002, the finance and logistics business                               Agri-marine products: This group produces and sells all sorts of
segment was added, and the iron and steel segment was excluded                              foods such as agricultural and marine products, processed food
since its business was transferred to Marubeni-Itochu Steel Inc.                            and beverages, raw materials and fodder and manure in
on October 1, 2001. These segments are outlined as follows:                                 addition to distributing these products on a worldwide basis.
IT Business: This group is engaged in information technology-related                        Textile: As an organization handling various textile-related
businesses such as: IP network infrastructures; overseas communica-                         goods from raw materials through finished products, the group
tion facilities; cellular phones; wholesale and retail sales of hardware                    purchases and produces raw materials for apparel and designs
and software for personal computers; medical healthcare; BS/CS                              and sells apparel and living products in addition to rendering
broadcasting; ASP/ISP, etc., both domestically and internationally.                         distribution services on a worldwide basis.
Utility and infrastructure: This group develops and promotes                                Development and construction: This group develops
the privatization of electricity, water and solid waste businesses                          condominiums, houses and apartments, and develops and rents
both domestically and internationally. In addition, the group                               sports facilities and commercial buildings in Japan while
provides construction, installation and supplies businesses                                 operating internationally as a general area developer.
related to railroads, airports, harbors, bridges and others.                                Finance and logistics business: This group is involved in project
Plant and ship: This group constructs and supplies a wide variety                           finance, non-bank financial services and the insurance business while
of industrial plants and participates in investments in these                               it invests in infrastructure projects for logistics and operates a
businesses both domestically and internationally. In addition, it                           forwarding and a third party logistics business, improving efficiency
supplies cargo ships and tankers, and owns and operates a fleet.                            in logistics operations through supply chain management.
Transportation and industrial machinery: This group imports                                 Domestic branches and offices: Domestic branches and offices
and exports vehicles, construction equipment, agro-industrial                               are located throughout Japan, including Hokkaido, Tohoku,
equipment, environmental and industrial equipment, airplanes,                               Chubu, Chugoku-Shikoku, Kyushu, and handle various
defense-related equipment and aerospace-related equipment                                   merchandise and carry out related activities.
both domestically and internationally.                                                      Overseas corporate subsidiaries and branches: Overseas
Energy: This group focuses on products related to energy such as                            corporate subsidiaries and branches are located throughout the
oil, gas, nuclear energy and coal. It also enters into various                              world, primarily in North America and Europe, and handle
businesses which benefit from the development of resources,                                 various merchandise and perform related activities.
such as retail gas stations.

                                                                                                                                                Marubeni Corporation 2003   77
            The Companies’ operating segment information for the years ended March 31, 2003, 2002 and 2001, were as follows:
                                                                                                                             Millions of yen
                                                                                                                     Transportation                      Metals and                     Forest products
                                                                                   Utility and         Plant and     and industrial                       mineral                         and general
        Year ended March 31, 2003                                  IT business   infrastructure           ship         machinery           Energy        resources          Chemicals    merchandise

        Total volume of trading transactions:
          Outside customers .......................                 ¥381,758         ¥421,743          ¥732,978           ¥753,677     ¥2,308,904           ¥414,473        ¥547,563          ¥705,421
          Inter-segment ................................               4,404              107             3,498             22,901            849             27,871          22,365            40,355
               Total ...........................................    ¥386,162         ¥421,850          ¥736,476           ¥776,578     ¥2,309,753           ¥442,344        ¥569,928          ¥745,776
        Gross trading profit ..........................             ¥ 32,559         ¥ 11,832          ¥ 13,866           ¥ 54,371     ¥       29,615       ¥ 13,984        ¥ 29,279          ¥ 41,242
        Segment net income (loss) ...............                   ¥ (7,990)        ¥ 4,508           ¥ 1,277            ¥ 3,567      ¥        6,556       ¥ 1,923         ¥ 2,063           ¥ 4,868
        Segment assets ..................................           ¥245,103         ¥232,197          ¥392,244           ¥292,581     ¥ 348,338            ¥157,820        ¥147,420          ¥299,009
        Depreciation and amortization .......                       ¥ 4,452          ¥ 2,977           ¥     283          ¥ 1,791      ¥        5,452       ¥ 2,477         ¥ 4,320           ¥ 3,323
        Expenditures for segment assets ....                        ¥ 2,868          ¥ 2,641           ¥     582          ¥ 1,375      ¥        5,507       ¥ 1,153         ¥ 2,418           ¥ 3,851

                                                                                                                             Millions of yen
                                                                                                                                                          Overseas
                                                                                                   Development Finance and                 Domestic       corporate       Corporate
                                                                   Agri-marine                         and       logistics                 branches      subsidiaries        and
                                                                    products             Textile   construction  business                 and offices   and branches     elimination     Consolidated

        Total volume of trading transactions:
          Outside customers ....................... ¥1,006,979                       ¥366,742          ¥185,346           ¥ 32,479         ¥158,639     ¥ 771,859        ¥ 4,742          ¥8,793,303
          Inter-segment ................................ 16,534                         3,535               494              5,355           14,296       293,508         (456,072)                –
               Total ........................................... ¥1,023,513          ¥370,277          ¥185,840           ¥ 37,834         ¥172,935     ¥1,065,367       ¥(451,330)       ¥8,793,303
        Gross trading profit .......................... ¥              58,559        ¥ 24,494          ¥ 34,027           ¥ 6,523          ¥ 6,081      ¥     72,827     ¥ (4,616)        ¥ 424,643
        Segment net income (loss) ............... ¥                     7,066        ¥ 1,934           ¥     (205)        ¥ 3,344          ¥      836   ¥      4,943     ¥ (4,378)        ¥     30,312
        Segment assets .................................. ¥ 347,483                  ¥123,868          ¥376,963           ¥169,504         ¥ 60,764     ¥ 491,371        ¥ 636,817        ¥4,321,482
        Depreciation and amortization ....... ¥                         5,206        ¥       378       ¥ 3,411            ¥ 12,000         ¥      197   ¥      9,561     ¥      7,837     ¥     63,665
        Expenditures for segment assets .... ¥                          8,710        ¥       199       ¥ 2,072            ¥ 7,475          ¥      117   ¥     14,521     ¥      6,174     ¥     59,663

                                                                                                                      Thousands of U.S. dollars
                                                                                                                     Transportation                      Metals and                     Forest products
                                                                                   Utility and      Plant and        and industrial                       mineral                         and general
        Year ended March 31, 2003                                  IT business   infrastructure        ship            machinery           Energy        resources       Chemicals       merchandise

        Total volume of trading transactions:
          Outside customers ....................... $3,181,317                   $3,514,525        $6,108,150         $6,280,642      $19,240,866       $3,453,942      $4,563,025        $5,878,508
          Inter-segment ................................ 36,700                         892            29,150            190,841            7,075          232,258         186,375           336,292
               Total ........................................... $3,218,017      $3,515,417        $6,137,300         $6,471,483      $19,247,941       $3,686,200      $4,749,400        $6,214,800
        Gross trading profit .......................... $ 271,325                $        98,600   $ 115,550          $ 453,092       $      246,792    $ 116,533       $ 243,992         $ 343,683
        Segment net income (loss) ............... $ (66,584) $                            37,566   $       10,642     $     29,725    $        54,633   $     16,025    $     17,192      $     40,566
        Segment assets .................................. $2,042,525             $1,934,975        $3,268,700         $2,438,175      $ 2,902,817       $1,315,167      $1,228,500        $2,491,742
        Depreciation and amortization ....... $                        37,100    $        24,808   $        2,358     $     14,925    $        45,433   $     20,642    $     36,000      $     27,692
        Expenditures for segment assets .... $                         23,900    $        22,008   $        4,850     $     11,458    $        45,892   $      9,608    $     20,150      $     32,092

                                                                                                                      Thousands of U.S. dollars
                                                                                                                                                          Overseas
                                                                                                   Development Finance and                 Domestic       corporate      Corporate
                                                                   Agri-marine                         and       logistics                 branches      subsidiaries       and
                                                                    products         Textile       construction  business                 and offices   and branches    elimination     Consolidated

        Total volume of trading transactions:
          Outside customers ....................... $8,391,492                   $3,056,184        $1,544,550         $ 270,658        $1,321,992       $6,432,158 $   39,516 $73,277,525
          Inter-segment ................................ 137,783                     29,458             4,117            44,625           119,133        2,445,900 (3,800,599)          –
               Total ........................................... $8,529,275      $3,085,642        $1,548,667         $ 315,283        $1,441,125       $8,878,058 $(3,761,083) $73,277,525
        Gross trading profit .......................... $ 487,992                $ 204,117         $ 283,558          $     54,358     $       50,675   $ 606,892 $           (38,467) $ 3,538,692
        Segment net income (loss) ............... $                    58,883    $        16,117   $       (1,708) $        27,867     $        6,967   $     41,192 $        (36,483) $       252,600
        Segment assets .................................. $2,895,692             $1,032,233        $3,141,358         $1,412,533       $ 506,367        $4,094,758 $ 5,306,808 $36,012,350
        Depreciation and amortization ....... $                        43,383    $         3,150   $       28,425     $ 100,000        $        1,642   $     79,675 $        65,309 $         530,542
        Expenditures for segment assets .... $                         72,583    $         1,658   $       17,267     $     62,292     $          976   $ 121,008 $           51,450 $         497,192




78   Marubeni Corporation 2003
                                                                                                                Millions of yen
                                                                                                          Transportation                         Metals and                  Forest products
                                                                           Utility and       Plant and    and industrial                          mineral                      and general
Year ended March 31, 2002                                  IT business   infrastructure         ship        machinery          Energy            resources     Chemicals      merchandise

Total volume of trading transactions:
  Outside customers .......................                 ¥462,716         ¥329,565       ¥593,155        ¥756,297       ¥2,195,849            ¥430,132       ¥518,620          ¥695,337
  Inter-segment ................................               4,427              185          7,539          17,906            1,099              45,965         20,239            33,147
       Total ...........................................    ¥467,143         ¥329,750       ¥600,694        ¥774,203       ¥2,196,948            ¥476,097       ¥538,859          ¥728,484
Gross trading profit ..........................             ¥ 33,205         ¥ 10,564       ¥ 10,251        ¥ 52,466       ¥       30,285        ¥ 14,589       ¥ 28,694          ¥ 40,833
Segment net income (loss) ...............                   ¥ (35,647)       ¥ 1,960        ¥ (30,202)      ¥ (6,250)      ¥        5,465        ¥ (1,369)      ¥ 2,111           ¥ 3,060
Segment assets ..................................           ¥263,365         ¥212,807       ¥402,287        ¥329,131       ¥ 351,483             ¥177,754       ¥165,692          ¥331,755
Depreciation and amortization .......                       ¥ 3,808          ¥ 3,968        ¥ 1,796         ¥ 3,756        ¥        7,133        ¥ 2,196        ¥ 2,600           ¥ 2,737
Expenditures for segment assets ....                        ¥ 11,635         ¥ 4,710        ¥ 8,524         ¥ 1,674        ¥        3,255        ¥     188      ¥ 1,880           ¥ 4,687

                                                                                                                Millions of yen
                                                                                                                                               Overseas
                                                                                           Development Finance and          Domestic           corporate        Corporate
                                                           Agri-marine                         and       logistics          branches          subsidiaries         and
                                                            products             Textile   construction  business          and offices       and branches      elimination   Consolidated

Total volume of trading transactions:
  Outside customers ....................... ¥1,030,882                       ¥434,724       ¥184,018        ¥ 39,435           ¥276,451      ¥ 792,738         ¥ 232,326      ¥8,972,245
  Inter-segment ................................ 13,912                         3,664            909           7,025             20,912        307,319          (484,248)              –
       Total ........................................... ¥1,044,794          ¥438,388       ¥184,927        ¥ 46,460           ¥297,363      ¥1,100,057        ¥(251,922)     ¥8,972,245
Gross trading profit .......................... ¥             60,276         ¥ 28,134       ¥ 32,183        ¥ 6,774            ¥ 6,585       ¥       74,704    ¥    7,261     ¥ 436,804
Segment net income (loss) ............... ¥                    (6,475)       ¥ 1,352        ¥ (23,362)      ¥     447          ¥ (1,399) ¥ (11,363)            ¥ (14,746)     ¥ (116,418)
Segment assets .................................. ¥ 346,456                  ¥150,503       ¥398,484        ¥340,354           ¥ 92,549      ¥ 563,108         ¥ 679,941      ¥4,805,669
Depreciation and amortization ....... ¥                         4,671        ¥       830    ¥ 3,526         ¥ 16,161           ¥     148     ¥        9,782    ¥    7,940     ¥     71,052
Expenditures for segment assets .... ¥                          8,076        ¥       652    ¥ 13,260        ¥ 12,547           ¥     243     ¥       14,701    ¥ (9,249)      ¥     76,783

                                                                                                                Millions of yen
                                                                                                       Transportation                          Metals
                                                                           Utility and       Plant and and industrial                        and mineral        Iron and
Year ended March 31, 2001                                  IT business   infrastructure         ship     machinery             Energy         resources           steel           Chemicals

Total volume of trading transactions:
  Outside customers .......................                 ¥444,564         ¥424,372       ¥505,369        ¥814,057       ¥1,909,479            ¥470,489       ¥483,958          ¥574,741
  Inter-segment ................................               6,536              194          6,027          22,442            1,670              53,352         46,016            26,790
       Total ...........................................    ¥451,100         ¥424,566       ¥511,396        ¥836,499       ¥1,911,149            ¥523,841       ¥529,974          ¥601,531
Gross trading profit ..........................             ¥ 41,328         ¥ 10,126       ¥ 20,188        ¥ 53,179       ¥       31,258        ¥ 15,517       ¥ 25,524          ¥ 29,571
Segment net income (loss) ...............                   ¥ (3,526)        ¥ (3,524)      ¥ (14,002)      ¥ (10,489)     ¥        8,383        ¥ 2,738        ¥ (2,366)         ¥ 3,803
Segment assets ..................................           ¥303,382         ¥198,623       ¥573,658        ¥447,078       ¥ 318,981             ¥207,470       ¥251,544          ¥180,367
Depreciation and amortization .......                       ¥ 2,810          ¥ 3,554        ¥ 3,690         ¥ 21,155       ¥        4,342        ¥ 2,458        ¥    962          ¥ 4,087
Expenditures for segment assets ....                        ¥ 17,632         ¥ 1,884        ¥ 1,358         ¥ 23,035       ¥       16,976        ¥     252      ¥    592          ¥ 2,231

                                                                                                                Millions of yen
                                                              Forest                                                                           Overseas
                                                           products and                                   Development           Domestic       corporate        Corporate
                                                              general   Agri-marine                           and               branches      subsidiaries         and
                                                           merchandise   products               Textile   construction         and offices   and branches      elimination   Consolidated

Total volume of trading transactions:
  Outside customers .......................                 ¥759,723     ¥1,029,812         ¥483,641        ¥206,892           ¥408,320      ¥ 893,807         ¥ 27,639       ¥9,436,863
  Inter-segment ................................              34,604         22,951            5,255             620             26,869        335,478          (588,804)              –
       Total ...........................................    ¥794,327     ¥1,052,763         ¥488,896        ¥207,512           ¥435,189      ¥1,229,285        ¥(561,165)     ¥9,436,863
Gross trading profit ..........................             ¥ 43,987     ¥        65,040    ¥ 30,570        ¥ 29,123           ¥ 11,426      ¥       69,936    ¥    2,981     ¥ 479,754
Segment net income (loss) ...............                   ¥ 8,014      ¥         8,679    ¥ (3,462)       ¥ (5,381)          ¥ 1,126       ¥       (1,363)   ¥ 26,406       ¥     15,036
Segment assets ..................................           ¥381,894     ¥ 350,086          ¥184,097        ¥426,304           ¥170,607      ¥ 559,145         ¥ 767,368      ¥5,320,604
Depreciation and amortization .......                       ¥ 3,695      ¥         4,220    ¥       568     ¥ 3,016            ¥     281     ¥        8,562    ¥    6,514     ¥     69,914
Expenditures for segment assets ....                        ¥ 2,681      ¥         4,140    ¥       323     ¥ 3,592            ¥        77   ¥       21,681    ¥ (1,024)      ¥     95,430




                                                                                                                                                                    Marubeni Corporation 2003   79
           Effective April 1, 2001, the finance and logistics business                                                 States of America. The principal differences are described in Note 1.
        segment was created. The respective amounts for the years                                                         Intersegment transactions are generally priced in accordance
        ended March 31, 2001 were treated as Corporate.                                                                with the prevailing market prices.
           The accounting policies of the reportable segments are the                                                     The respective amounts of Iron and steel for the first half of
        accounting principles generally accepted in Japan.                                                             the year ended March 31, 2002 are included in Corporate and
           Corporate and elimination includes differences in accounting                                                elimination.
        principles generally accepted in Japan and those in the United

            Total volumes of trading transactions by country are as follows:
                                                                                                                                                                            Thousands of
                                                                                                                                     Millions of yen                         U.S. dollars
        Country                                                                                                          2003             2002              2001                2003

        Japan .....................................................................................................   ¥5,864,552       ¥6,075,145        ¥6,780,133         $48,871,267
        United States of America ...................................................................                   1,341,698        1,340,796         1,091,601          11,180,817
        United Kingdom .................................................................................                 271,730          182,915           143,767           2,264,416
        Other .....................................................................................................    1,315,323        1,373,389         1,421,362          10,961,025
          Total ..................................................................................................    ¥8,793,303       ¥8,972,245        ¥9,436,863         $73,277,525

            Total volumes of trading transactions are attributed to countries based on the location of operations.
            Long-lived assets, including property leased to others, by country are as follows:
                                                                                                                                                                            Thousands of
                                                                                                                                     Millions of yen                         U.S. dollars
        Country                                                                                                          2003              2002             2001                2003

        Japan .....................................................................................................    ¥491,188         ¥515,992          ¥571,326           $4,093,233
        United States of America ...................................................................                     99,318          135,495           127,608              827,650
        Australia ...............................................................................................        25,712           28,748            26,903              214,267
        Other .....................................................................................................      45,984           81,420           109,044              383,200
          Total ..................................................................................................     ¥662,202         ¥761,655          ¥834,881           $5,518,350

           Total volumes of trading transactions with external customers by product for the years ended March 31, 2003, 2002 and 2001, were
        as follows:
                                                                                                                                                                            Thousands of
                                                                                                                                     Millions of yen                         U.S. dollars
        Product                                                                                                          2003             2002              2001                2003

        Machinery ............................................................................................        ¥2,494,041       ¥2,279,414        ¥2,360,973         $20,783,675
        Energy ..................................................................................................      2,396,933        2,308,831         1,988,217          19,974,441
        Metals ...................................................................................................       502,251          874,196         1,326,967           4,185,425
        Chemicals .............................................................................................          910,187          863,307           909,064           7,584,892
        Forest products and general merchandise ......................................                                   807,806          819,288           901,502           6,731,717
        Agri-marine products ........................................................................                  1,063,732        1,112,431         1,139,875           8,864,433
        Textile ...................................................................................................      425,279          520,043           587,368           3,543,992
        Development and construction ........................................................                            193,074          194,735           222,897           1,608,950
          Total ..................................................................................................    ¥8,793,303       ¥8,972,245        ¥9,436,863         $73,277,525

            There is no concentration by customer.

        14. Foreign Currency Transactions

        Net foreign currency transaction gains and losses included in                                                  2002 and 2001, respectively. Net foreign currency transaction
        other income (losses) – net amounted to ¥5,331 million ($44,425                                                gains and losses include translation gains and losses resulting
        thousand) of loss for the year ended March 31, 2003 and ¥6,153                                                 from remeasuring the financial statements of certain subsidiaries
        million and ¥4,645 million of gains for the years ended March 31,                                              in highly inflationary economies into Japanese yen.

        15. Financial Instruments

        Risk management                                                                                                has internal regulations regarding positions and loss limits and
        Substantially all the derivative instruments which the Company                                                 the actual positions and gains/losses are periodically reported to
        and certain of its subsidiaries hold are utilized to hedge related                                             management. Although the Company and certain subsidiaries
        market risks, and gains and losses on the derivative instruments                                               are exposed to credit risks in the event of nonperformance by the
        are offset against losses and gains on the hedged assets and                                                   counterparties, such risks are minimized by avoiding a concen-
        liabilities. The Company and certain of its subsidiaries also enter                                            tration of counterparties, selecting counterparties with high
        into derivative transactions for trading purposes. The Company                                                 credit ratings and maintaining strict credit control.



80   Marubeni Corporation 2003
   The Company and certain of its subsidiaries have separate                                       Companies has been determined using available market
departments which confirm their financial transactions with the                                    information or other appropriate valuation methodologies.
counterparties from the departments which execute them. In                                         However, considerable judgement is required in interpreting
addition, the Company has as its “middle-office” a “Risk                                           market data to develop estimates of fair value. Consequently, the
Management Division,” in its Tokyo Head Office. The Risk                                           estimates are not necessarily indicative of the amounts that could
Management Division independently performs direct confirma-                                        be realized or would be paid in a current market exchange.
tion procedures with the counterparties to each transaction and                                       The following methodologies and assumptions were used by
the month-end outstanding balances, analyzes various risks and                                     the Companies in estimating the fair value disclosures of the
exposures, reports the results of the analysis, and monitors and                                   financial instruments:
controls financial risks. Furthermore, the Risk Management                                            Cash and cash equivalents, and time deposits:the carrying
Division obtains derivative transaction data from the financial                                    amounts of the cash and cash equivalents, and time deposits
subsidiaries and foreign corporate subsidiaries, reports to                                        reflected in the consolidated balance sheets approximate their
management periodically, and strengthens the Company’s                                             fair value.
unified global control over derivative transactions.                                                  Investment securities, securities and other investments:the
                                                                                                   fair value of marketable equity securities is based on quoted
Foreign exchange contracts                                                                         market prices. The carrying amount of the marketable equity
The Company and certain of its subsidiaries conduct business in                                    securities reflected in the balance sheets represents their fair
various foreign currencies and enter into foreign exchange                                         value. The fair value of investments in debt securities is based on
contracts principally to hedge foreign currency denominated                                        quoted market prices or estimated using discounted cash flow
transactions, assets and liabilities to minimize the effect of                                     analyses, based on the estimated current rates offered to the
foreign currency fluctuations. Gains and losses related to the                                     issuers for securities with similar terms and remaining maturi-
hedge ineffective portion and related to the portion of hedging                                    ties. It was not practicable to estimate the fair value of the
instruments excluded from assessment of hedge effectiveness                                        investments other than marketable equity securities and debt
were not significant for the year ended March 31, 2003.                                            securities without incurring excessive costs. The carrying
Interest rate swap agreements, including                                                           amount of the portion of the portfolio for which fair value could
                                                                                                   not be estimated was ¥284,377 million ($2,369,808 thousand) and
interest rate and currency swap agreements                                                         ¥319,024 million at March 31, 2003 and 2002, respectively, and
The Company and certain of its subsidiaries enter into interest                                    represents the cost of this portion of the portfolio, which
rate swap agreements primarily to change the fixed interest rates                                  management believes is not impaired.
on the principal of certain debt securities, loans receivable, short-                                 Long-term notes, loans and accounts receivable – trade: the
term loans and long-term debt to floating interest rates. Gains                                    fair value of long-term notes, loans and accounts receivable -
and losses related to the hedge ineffective portion and related to                                 trade is estimated using discounted cash flow analyses, based on
the portion of hedging instruments excluded from assessment of                                     the interest rates currently being offered to borrowers for similar
hedge effectiveness were not significant for the year ended                                        long-term notes, loans and accounts receivable - trade with
March 31, 2003. In addition, the Company and certain of its                                        similar credit ratings. The fair value of accounts receivable with
subsidiaries enter into interest rate swap agreements for trading                                  collectibility concerns is reflected at their carrying value less the
purposes on a limited basis.                                                                       related allowance for doubtful accounts.
Commodity futures and forward contracts                                                               Short-term loans: the carrying amount of the short-term loans
The Company and certain of its subsidiaries enter into commodity                                   reflected in the accompanying consolidated balance sheets
futures and forward contracts principally as a means of hedging                                    approximates their fair value.
the risks associated with certain inventories, commitments and                                        Long-term debt:the fair value of long-term debt is estimated
forecasted transactions. Gains and losses related to the hedge                                     using discounted cash flow analyses, based on the current
ineffective portion and related to the portion of hedging instru-                                  borrowing rates for borrowing arrangements with similar terms
ments excluded from the assessment of hedge effectiveness were                                     and remaining maturities.
not significant for the year ended March 31, 2003.                                                    Foreign exchange contracts:the fair value of for eign exchange
                                                                                                   contracts is estimated based on the quoted market prices of compa-
Other derivative instruments                                                                       rable contracts, adjusted where necessary for maturity differences.
The Company and certain of its subsidiaries utilize option                                            Interest rate swap agreements:the fair value of inter est rate
contracts primarily to hedge the risks associated with changes in                                  swap agreements is estimated using discounted cash flow
interest rates and exchange rates. Gains and losses related to the                                 analyses, based on the current swap rates for interest rate swap
hedge ineffective portion and related to the portion of hedging                                    agreements with similar terms and remaining periods.
instruments excluded from assessment of hedge effectiveness                                           Commodity futures and forward contracts:the fair value of
were not significant for the year ended March 31, 2003. In                                         commodity futures contracts is estimated based on the quoted
addition, the Company and certain of its subsidiaries enter into                                   market prices of comparable contracts, adjusted where necessary
other derivative contracts for trading purposes on a limited basis.                                for maturity differences.
                                                                                                      The carrying amounts and fair value of financial instruments
Fair value of financial instruments                                                                and the derivative instruments at March 31, 2003 and 2002 were
The estimated fair value of the financial instruments of the
                                                                                                   as follows (amounts in parentheses represent liabilities):

                                                                                                 Millions of yen                                Millions of U.S. dollars
                                                                                     2003                              2002                                2003
                                                                          Carrying             Fair         Carrying             Fair           Carrying              Fair
                                                                          amount              value         amount              value           amount               value
Short-term investments in debt securities .......                     ¥        13,108¥13,167              ¥63,198          ¥63,197          $     109,233     $      109,725
Long-term investments in debt securities ........                           53,578        50,353              70,349            64,493            446,483            419,608
Long-term notes, loans and accounts receivable -
 trade (less allowance for doubtful accounts) ......                     245,887               245,666        332,254            331,749      2,049,058             2,047,217
Long-term debt ....................................................   (2,304,513)           (2,252,911)    (2,576,502)        (2,466,990)   (19,204,275)          (18,774,258)
Interest rate swaps ...............................................       50,194                50,194         37,860             37,860        418,283               418,283
Foreign exchange contracts ................................                  290                   290          2,589              2,589          2,417                 2,417
Commodity futures and
 forward contracts and other .............................                  (1,367)             (1,367)            3,790          3,790            (11,392)           (11,392)


                                                                                                                                                       Marubeni Corporation 2003   81
        16. Concentration of Credit Risk

        Although the Company operates as a general trading business,                                                 addition, the Company operates in substantially all geographic
        their fields of business comprise export, import, domestic and                                               areas of the world, and their customers are diversified. Accord-
        offshore trading in a wide variety of industrial, agricultural and                                           ingly, management of the Company believes there is no signifi-
        consumer products, and also involve all levels of the production                                             cant concentration of credit risk among its customers or in its
        process from planning, investment, and research and develop-                                                 investments. The Company requires collateral to the extent
        ment, through production, distribution and marketing. In                                                     considered necessary.

        17. Commitments and Contingent Liabilities

        Rental expense, primarily for office space and equipment,                                                       At March 31, 2003, the future minimum lease payments
        amounted to ¥17,269 million ($143,908 thousand), ¥23,440 million                                             payable and rentals receivable under non-cancelable operating
        and ¥16,450 million for the years ended March31, 2003, 2002 and                                              leases were as follows:
        2001, respectively.
                                                                                                                           Millions of yen               Thousands of U.S. dollars
        Year ending March 31                                                                                           Payable         Receivable         Payable          Receivable

           2004 ..................................................................................................    ¥10,073           ¥14,262          $83,942            $118,850
           2005 ..................................................................................................       8,148               12,671         67,900           105,592
           2006 ..................................................................................................       6,173                9,912         51,442            82,600
           2007 ..................................................................................................       3,950                7,481         32,917            62,342
           2008 ..................................................................................................       3,310                5,239         27,583             43,658
           Thereafter ........................................................................................          17,080                7,008        142,333             58,400

           The future minimum rentals to be received under noncancel-                                                Certain of these guarantees were secured by guarantees issued to
        able subleases corresponding to the above future minimum lease                                               the Company by other parties. The outstanding balance of
        payments payable were not significant at March 31, 2003.                                                     guarantees, which approximated the maximum potential
           In fiscal 2002, the Company sold to a third party the build-                                              payment under these guarantees, was ¥276,431 million
        ings and property of Osaka headquarters and Nagoya branch                                                    ($2,303,592 thousand), including ¥151,355 million ($1,261,292
        for ¥12,500 million ($104,167 thousand) and ¥2,900 million                                                   thousand) to affiliated companies, at March 31, 2003, net of the
        ($24,167 thousand), respectively, and leased back these facilities.                                          amount secured by guarantees issued to the Company by other
        The lease terms are 10 years and 2 years, respectively. The                                                  parties of ¥21,258 million ($177,150 thousand). The comparable
        Company does not have continuing involvement under the                                                       amounts at March 31, 2002 were ¥382,148 million, ¥220,614
        sale-leaseback transactions.                                                                                 million and ¥27,026 million, respectively.
           The Company had commitments to make additional invest-                                                       The Company, its subsidiaries and affiliated companies
        ments or loans in aggregate amounts of approximately ¥18,000                                                 conduct business activities on a global scale and are involved in
        million ($150,000 thousand) and ¥40,000 million at March 31, 2003                                            transactions which are subject to review and jurisdiction by a wide
        and 2002, respectively.                                                                                      range of authorities, both in Japan and abroad. Such business
           The Company guarantees debt of affiliated companies and                                                   activities are not without risk and, from time to time, may involve
        third parties in the ordinary course of business. Should the                                                 legal actions, claims or other disputes. Although there are various
        guaranteed parties fail to make payments, the Company would                                                  matters pending at any one time, management is of the opinion
        be required to make such payments under these guarantees. The                                                that settlement of all such matters pending at March 31, 2003
        term of the guarantees is basically one year. The related guaran-                                            would not have a material effect on the consolidated financial
        tee fees are primarily received quarterly or semi-annually.                                                  position or results of operations of the Companies.

        18. Subsequent Events

        At the June 26, 2003 annual meeting, the shareholders approved                                               obligation and the related plan asset in accordance with the
        the payment of a cash dividend of ¥3 per share, aggregating                                                  consensus reached by the Emerging Issue Task Force on Issue
        ¥4,480 million ($37,333 thousand).                                                                           No. 03-2, Accounting for the Transfer to the Japanese Government of
           On April 15, 2003, the Marubeni Welfare Pension Fund                                                      the Substitutional Portion of Employee Pension Fund Liabilities. The
        received approval from the Japanese government to transfer the                                               Company expects to complete the transaction in the year ending
        future benefit obligation related to the substitutional portion for                                          March 31, 2004, when the related gain or loss will be recognized.
        the government-defined benefit prescribed by the Welfare                                                     The effect of the completion of the transaction has not yet been
        Pension Insurance Law of Japan. The Company will account for                                                 determined because the amount of the benefit obligation and the
        the entire process upon completion of the transfer to the                                                    related plan assets to be transferred may change.
        Japanese government of the substitutional portion of the benefit




82   Marubeni Corporation 2003
Marubeni Corporation 2003   83
        International Network




        Africa                   Europe       Middle East   CIS           Oceania     China

        Abidjan                  Athens       Abu Dhabi     Almaty        Auckland    Beijing
        Accra                    Berlin       Amman         Khabarovsk    Brisbane    Dalian
        Addis Ababa              Brussels     Ankara        Kiev          Melbourne   Guangzhou
        Algiers                  Bucharest    Baghdad       Moscow        Noumea      Hong Kong
        Cairo                    Budapest     Doha          Tashkent      Perth       Kunming
        Harare                   Dublin       Dubai         Yuzhno-       Sydney      Nanjing
        Johannesburg             Düsseldorf   Istanbul       Sakhalinsk               Ningbo
        Lagos                    Hamburg      Muscat                                  Qingdao
        Lusaka                   Helsinki     Riyadh                                  Shanghai
        Nairobi                  London       Sana’a                                  Shenzhen
        Tripoli                  Madrid       Tehran                                  Tianjin
                                 Milan                                                Xiamen
                                 Oslo
                                 Paris
                                 Prague
                                 Risley
                                 Stockholm
                                 Warsaw


84   Marubeni Corporation 2003
                                                                         Overseas Corporate
                                                                         Subsidiaries

                                                                         Marubeni America Corporation
                                                                         (New York)
                                                                         Marubeni Canada Ltd.
                                                                         (Vancouver)
                                                                         Marubeni Mexico S.A. de C.V.
                                                                         (Mexico City)
                                                                         Marubeni Venezuela C.A.
                                                                         (Caracas)
                                                                         Marubeni Brasil S.A.
                                                                         (São Paulo)
                                                                         Marubeni Argentina S.A.
                                                                         (Buenos Aires)
                                                                         Marubeni Chile Limitada
                                                                         (Santiago)
                                                                         Marubeni Europe plc
                                                                         (London)
                                                                         Marubeni Deutschland GmbH
                                                                         (Düsseldorf)
                                                                         Marubeni Benelux S.A.
                                                                         (Brussels)
                                                                         Marubeni France S.A.
                                                                         (Paris)
                                                                         Marubeni Iberia S.A.
                                                                         (Madrid)
                                                                         Marubeni Scandinavia AB
                                                                         (Stockholm)
                                                                         Marubeni Nigeria Ltd.
                                                                         (Lagos)
                                                                         Marubeni Saudi Arabia Co., Ltd.
                                                                         (Riyadh)
                                                                         Marubeni Iran Co., Ltd.
                                                                         (Tehran)
                                                                         Marubeni India Private Ltd.
                                                                         (New Delhi)
                                                                         Marubeni Singapore Pte. Ltd.
Asia                                 North              Central and      (Singapore)
                                     America            South America    Dagangterus Sdn. Bhd.
Bandung            Lahore            Boston             Bogotá           (Kuala Lumpur)
Bangkok            Manila            Calgary            Buenos Aires     Marubeni Thailand Co., Ltd.
                                                                         (Bangkok)
Calcutta           Mumbai (Bombay)   Detroit            Caracas
                                                                         P.T. Marubeni Indonesia
Chittagong         New Delhi         Houston            Lima             (Jakarta)
Colombo            Phnom Penh        Los Angeles        Mexico City      Marubeni Philippines Corporation
Dhaka              Seoul             New York           Rio de Janeiro   (Manila)
Goa                                  Omaha              Salvador         Marubeni China Co., Ltd.
                   Sibu
                                                                         (Shanghai)
Hanoi              Singapore         Portland           San José         Marubeni Hong Kong &
Ho Chi Minh City   Taipei            San Francisco      Santiago           South China Ltd.
Islamabad          Ulan Bator        Toronto            São Paulo        (Hong Kong)
Jakarta                              Vancouver                           Marubeni Taiwan Co., Ltd.
                   Vientiane
                                                                         (Taipei)
Kaohsiung          Yangon            Washington, D.C.                    Marubeni Korea Corporation
Karachi                                                                  (Seoul)
Kota Kinabalu                                                            Marubeni Australia Ltd.
Kuala Lumpur                                                             (Sydney)
                                                                         Marubeni New Zealand Ltd.
Kuching                                                                  (Auckland)

                                                                                       (As of April 1, 2003)


                                                                                      Marubeni Corporation 2003   85
        Major Subsidiaries and Affiliates



        AGRI-MARINE PRODUCTS

        company name                               main business                                                                                   nationality   ownership

         Akagi Suisan Co., Ltd.                    Processing and wholesale of marine products                                                     Japan          27.0%
       • Beni Frozen Corporation                   Wholesale of frozen foods                                                                       Japan          84.0%
       • Benirei Corporation                       Refrigerated warehousing and wholesale of marine products                                       Japan          74.5%
         Central Japan Grain Terminal Co., Ltd.    Grain warehousing, stevedoring and transportation operations                                    Japan          50.0%
       • Cia. Iguaçu de Café Solúvel               Production of instant coffee                                                                    Brazil         61.5%
       • Columbia Grain International, Inc.        Grain trading                                                                                   U.S.A.        100.0%
         Fremont Beef Company                      Meat and variety meat processing                                                                U.S.A.         45.0%
         Great Wall Dalian Investment Co., Ltd.    Broiler farming and processing                                                                  China          40.0%
         Katakura Chikkarin Co., Ltd.              Manufacturing of fertilizer, marketing of LPG, feedstuffs and foods                             Japan          24.5%
       • Marubeni Chikusan Corporation             Marketing of livestock, meats and processed products                                            Japan          99.9%
       • Marubeni Egg Corporation                  Production and sales of eggs                                                                    Japan         100.0%
       • Marubeni Foods Corporation                Wholesale of coffee, tea, alcoholic beverages and foodstuffs                                    Japan          96.8%
       • Marubeni Foods Investment Co., Ltd.       Investment in retailers for the Agri-Marine Products Group of Marubeni                          Japan         100.0%
       • Marubeni Shiryo Co., Ltd.                 Manufacture of compound feed                                                                    Japan          99.7%
       • Marukoh Fisheries Co., Ltd.               Wholesale of domestic and imported tuna                                                         Japan          86.1%
       • Melitta Japan Ltd.                        Coffee filter paper, equipment trading                                                          Japan          60.0%
         Metro Cash & Carry Japan K.K.             Wholesale of foods for professional customers such as hotels,                                   Japan          20.0%
                                                   restaurants and caterers
        Nacx Nakamura Corporation                  Wholesale, transportation and processing of frozen foods,                                       Japan          20.0%
                                                   and refrigerated warehousing
         Nissan-Agri Co., Ltd.                     Production and sales of fertilizer, sales of agricultural chemicals and golf-related business   Japan          34.9%
         OM2 Network Co., Ltd.                     Meat store chain                                                                                Japan          17.3%
       • Pacific Grain Terminal Ltd.               Grain warehousing, stevedoring and transportation                                               Japan          76.8%
       • Rangers Valley Cattle Station Pty. Ltd.   Cattle feedlot operation                                                                        Australia     100.0%
       • Rice World Co., Ltd.                      Wholesale of rice and processed rice                                                            Japan          80.0%
         S Foods Inc.                              Meat and variety meat processing and sales                                                      Japan          15.0%
       • Seiwa Shokuhin Co., Ltd.                  Wholesale of frozen foods                                                                       Japan          70.0%
       • Stork Corporation                         Catering services                                                                               Japan          70.0%
       • Ten Corporation                           Management of “Ten-Don” fast-food chain                                                         Japan          50.5%
         The Maruetsu, Inc.                        Supermarket chain                                                                               Japan          29.0%
         The Nisshin OilliO Group, Ltd.            Seed crushing and sales of edible oils, fine chemicals and healthy food products                Japan          15.0%
         Tokyo Allied Coffee Roasters Co., Ltd.    Manufacture and wholesale of roasted coffee                                                     Japan          22.1%
       • Tokyo Flour Milling Co., Ltd.             Flour milling                                                                                   Japan          59.3%
         Toyo Sugar Refining Co., Ltd.             Sugar refining                                                                                  Japan          39.2%
         Viñas Argentinas S.A.                     Production of wine and must                                                                     Argentina      40.0%
         Weifang Meicheng Foodstuffs               Broiler farming and processing                                                                  China          20.0%
         Company Ltd.
         Wyoming Premium Farm LLC.                 Pig farming                                                                                     U.S.A.         40.0%
         Yamaboshiya Co., Ltd.                     Wholesale of confectionery                                                                      Japan          44.7%

        TEXTILE

        company name                               main business                                                                                   nationality   ownership

       • Benny Toyama Corporation                  Manufacture of fishing nets and warp-knit products                                              Japan          96.7%
         Erawan Textile Co., Ltd.                  Spinning and weaving of cotton and polyester/cotton fabrics                                     Thailand       37.2%
         Fabricant Co., Ltd.                       Production and sales of casual wear                                                             Japan          33.4%
       • Kyoto Marubeni Co., Ltd.                  Wholesale of Japanese kimonos and related products                                              Japan          99.9%
       • Marubeni Fashion Link, Ltd.               Marketing and sales of fabric, apparel and sportswear                                           Japan         100.0%
       • Marubeni Fashion Planning Corp.           Consulting on fashion merchandising, planning, design and research                              Japan         100.0%
       • Marubeni Intex Co., Ltd.                  Wholesale of industrial and interior textiles, ready-made goods and materials                   Japan          99.4%
       • Marubeni Tex Co., Ltd.                    Wholesale of textile piece goods, knitting yarn and textile ready-made goods                    Japan         100.0%
       • Marubeni Textile Asia Ltd.                Textile materials trade                                                                         China         100.0%
       • Marubeni Textile (Shanghai) Co., Ltd.     Textile materials trade                                                                         China         100.0%
       • Pacific Clothing Inc.                     Production and sales of casual wear                                                             Japan          70.0%
       • Passport Fashion Company Limited          Production and quality control of apparel made up overseas                                      China         100.0%
       • Shanghai Xin Hong Textile Co., Ltd.       Spinning of synthetic yarn                                                                      China          65.0%


        • Consolidated subsidiary

86   Marubeni Corporation 2003
 Thai Textile Development &                   Dyeing, printing and finishing of medium- to heavy-weight fabrics                   Thailand       27.1%
 Finishing Co., Ltd.
 Tokai Dyeing Co., (Thailand) Ltd.            Dyeing, printing and finishing of cotton and synthetic fabrics                      Thailand       31.2%

 FOREST PRODUCTS & GENERAL MERCHANDISE

 company name                                 main business                                                                       nationality   ownership

  Daishowa-Marubeni International Ltd.        Manufacture and sales of bleached kraft pulp                                        Canada         50.0%
• Forestnet Co., Ltd.                         Sales and marketing of printing/writing paper by Internet,
                                              and other related services                                                          Japan          65.0%
• Fukuyama Paper Co., Ltd.                    Manufacture of corrugating medium and paper tube materials                          Japan          55.0%
• Koa Kogyo Co., Ltd.                         Manufacture of corrugating medium, containerboard and printing paper                Japan          77.5%
• Marubeni Building Materials Co., Ltd.       Wholesale of wood products and construction materials                               Japan         100.0%
• Marubeni Business Machines                  Sales of copying machines and other office equipment to Central and                 U.S.A.        100.0%
  (America), Inc.                             South America
• Marubeni Cement & Construction              Wholesale of cement and construction materials                                      Japan          90.0%
  Materials Co., Ltd.
• Marubeni CLS Corporation                    Sales of synthetic leather                                                          Japan         100.0%
• Marubeni Footwear Inc.                      Export, import and wholesale of footwear                                            Japan         100.0%
• Marubeni International Commodities          Sales of natural rubber and related products                                        Singapore     100.0%
  (Singapore) Pte. Ltd.
• Marubeni Lumber Co., Ltd.                   Sawmilling and wholesale of logs and lumber                                         Japan         100.0%
• Marubeni Office Supply Co., Ltd.            Conversion and sales of information processing paper                                Japan          97.1%
• Marubeni Paper & Pulp Logistics Co., Ltd.   Integrated logistics management of imported and domestic paper and pulp products    Japan          91.9%
• Marubeni Paper Recycle Co., Ltd.            Assortment and sales of waste paper                                                 Japan         100.0%
• Marubeni Pulp & Paper Sales Co., Ltd.       Wholesale of all types of paper                                                     Japan          88.2%
• Marubeni Pulp & Paper Sales                 Sales of thermal paper, inkjet paper and pulp                                       Germany       100.0%
  Europe GmbH
  Marusumi Paper Co., Ltd.                    Manufacture of printing paper                                                       Japan          32.2%
• Pan Pacific Fiber, Inc.                     Waste paper collection and sales                                                    U.S.A.         66.7%
• Precision Japan Ltd.                        Sales of golf component parts                                                       Japan         100.0%
• Southern Plantation Forest Pty. Ltd.        Hardwood plantation, chip production and sales activities                           Australia      57.1%
• U Derivatives Pte. Ltd.                     Natural rubber trading                                                              Singapore      99.0%
• Unimac Rubber Company Ltd.                  Production and sales of natural rubber                                              Thailand       75.0%
• WA Plantation Resources Pty Ltd             Wood chip export and plantation                                                     Australia      60.0%
  Yokohama Reifen GmbH                        Sales of Yokohama Tires                                                             Germany        25.0%

 CHEMICALS

 company name                                 main business                                                                       nationality   ownership

• AGROVISTA B.V.                              Holding company of agrochemicals distribution companies in the U.K. and             U.K.          100.0%
                                              the Netherlands
• Agrovista France S.A.S.                     Holding company of agrochemicals and home and garden products distribution          France        100.0%
                                              companies in France
  Ain Medical Systems Inc.                    Pharmacy operation in Kanto area                                                    Japan          44.3%
  Ain Pharmaciez Inc.                         Pharmacy operation                                                                  Japan          15.0%
  Beijing Asahi Glass Electronics Co., Ltd.   Manufacture and sales of multiform and frit glass                                   China          20.0%
  CMK Electronics (WUXI) Co., Ltd.            Manufacture and sales of PCB (printed circuit board)                                China          20.0%
  Dampier Salt Limited                        Production and sales of salt and gypsum                                             Australia      20.4%
• Helena Chemical Company                     Distribution of agrochemicals, fertilizer and seeds                                 U.S.A.        100.0%
• Image Ukraine CJSC                          Sales of photosensitive materials and products                                      Ukraine        76.0%
  Italpet Preforme S.p.A.                     Manufacture of PET resin and preforms                                               Italy          37.5%
• Marubeni Chemical Asia Pacific Pte. Ltd.    Import/export/offshore trade of organic and specialty chemicals                     Singapore     100.0%
• Marubeni Chemix Corporation                 Sales and foreign trade of organic chemicals and specialty chemicals                Japan         100.0%
• Marubeni Information Technology             Import/export of electronic-related components and materials                        China         100.0%
  (Shanghai) Co., Ltd.
• Marubeni Plax Corporation                   Sales and foreign trade of plastic products and resin                               Japan         100.0%
• Marubeni Specialty Chemicals                Sales and foreign trade of specialty chemicals                                      Germany       100.0%
  (Europe) GmbH
• Marubeni Specialty Chemicals Inc.           Sales and foreign trade of specialty chemicals                                      U.S.A.        100.0%
• M-I Chemicals Co., Ltd.                     Manufacture and sales of PVC compounds                                              Japan         100.0%
  Mizushima Paraxylene Co., Ltd.              Production and sales of paraxylene                                                  Japan          50.0%
• Nantong Wanhong Agrochemical Co., Ltd.      Formulation and sales of agrochemicals                                              China          85.0%
  P.T. Fukusuke Kogyo                         Manufacture and sales of PE films                                                   Indonesia      20.0%
• Polyglory Plastics (Hong Kong) Ltd.         Manufacture and sales of PE films                                                   China          87.0%



 • Consolidated subsidiary

                                                                                                                                 Marubeni Corporation 2003   87
       • Polytech Incorporated                       Sheeting of recycled PET resin                                                           Japan            100.0%
       • Saitama Pet Bottle Recycle Co., Ltd.        Production and sales of PET flakes made from used PET bottles                            Japan            100.0%
         Shanghai Asahi Electronic Glass Co., Ltd.   Manufacture and sales of glass bulbs for CRT                                             China             25.0%
       • Shinko Chemical Terminal Co., Ltd.          Manufacture, sales, transportation and storage of chemical products                      Japan             85.5%
         Wuxi Zhenyu Chemical Co., Ltd.              Production and sales of sulphuric acid, SOP and hydrochloric acid                        China             44.4%
       • ZAO FUJIFILM RU                             Sales of photosensitive materials and products                                           Russia           100.0%

        ENERGY

        company name                                 main business                                                                            nationality      ownership

       • D.M. Gas Station, Inc.                      Sales of petroleum products                                                              Japan            100.0%
       • Energy U.S.A. Inc.                          Nuclear energy related business                                                          U.S.A.           100.0%
       • Marubeni Energy Corporation                 Sales of petroleum products and LPG                                                      Japan            100.0%
       • Marubeni Ennex Corporation                  Oil terminals                                                                            Japan            100.0%
       • Marubeni International Petroleum            Petroleum trading                                                                        Singapore        100.0%
         (Singapore) Pte. Ltd.
       • Marubeni LNG International B.V.             Investment in LNG projects                                                               Netherlands      100.0%
       • Marubeni Oil & Gas (U.K.) Limited           Oil and gas development and production                                                   U.K.             100.0%
       • Marubeni Oil & Gas (U.S.A.) Limited         Oil and gas development and production                                                   U.S.A            100.0%
       • Marubeni Utility Services, Ltd.             Sales of nuclear power plant related components and services                             Japan            100.0%
       • MIECO Inc.                                  Petroleum trading                                                                        U.S.A.           100.0%
       • MQL International B.V.                      Investment in LNG projects                                                               Netherlands      100.0%
         Qatar LNG Investment Co., Ltd.              Natural gas development                                                                  Japan             50.0%
         Qatar LNG Service Agency Co., Ltd.          LNG importing services                                                                   Japan             50.0%
       • Ravva Oil (Singapore) Pte. Ltd.             Oil and gas development and production                                                   Singapore        100.0%
         Shenzhen Sino-Benny LPG Co., Ltd.           Import and sales of LPG                                                                  China             49.0%
       • Toh-hoku Sekiyugas Co., Ltd.                Sales of petroleum products and LPG                                                      Japan            100.0%

        METALS & MINERAL RESOURCES

        company name                                 main business                                                                            nationality      ownership

         ANT Minerals Pty. Ltd.                      Investing in McArthur River zinc mine in Australia                                       Australia         20.0%
       • Marubeni Aluminium Australia Pty. Ltd.      Investment in aluminum business in Australia and sales of aluminum ingots                Australia        100.0%
       • Marubeni Caja Investment Limited            Investing in Sociedad Minera Refineria de Zinc Cajamarquilla S.A. in Peru                Cayman Islands   100.0%
       • Marubeni Coal Pty. Ltd.                     Investment in coal business in Australia                                                 Australia        100.0%
       • Marubeni LP HOLDING B.V.                    Investing in Los Pelambres copper mine in Chile                                          Netherlands      100.0%
       • Marubeni Metals & Minerals (Canada) Inc.    Investment in aluminum business in Canada and sale of aluminum ingot                     Canada           100.0%
       • Marubeni Metals Corporation                 Sales of nonferrous and light metal products                                             Japan            100.0%
       • Marubeni Tetsugen Co., Ltd.                 Sales of raw materials for steelmaking, ferro alloys and other minerals                  Japan            100.0%
       • Marubeni Thermal Coal Pty. Ltd.             Investment in Dartbrook coal mine in Australia                                           Australi a       100.0%
         NMBG (H.K.) Ltd.                            Production and sales of intermediate materials used in production of                     China             30.0%
                                                     printed circuit boards
        Silbasa-Silicio de Alta Pureza da            Production and sales of high purity ferro silicon                                        Brazil            24.6%
        Bahia S.A.
        Toyo-Memory Technology Sdn. Bhd.             Production of aluminum disks for hard disk drives (HDDs)                                 Malaysia          40.0%

        TRANSPORTATION & INDUSTRIAL MACHINERY

        company name                                 main business                                                                            nationality      ownership

       • Avenue Machinery Corporation                Sales of Kubota- and AGCO- brand agricultural equipment                                  Canada           100.0%
       • Bi-County Saturn LLC                        Car dealer for Saturn brand                                                              U.S.A.            90.0%
         CODACA Holding & Investment Co., Ltd.       Import assembly and distribution of Hino trucks                                          Guatemala         49.0%
       • Computer Wave Inc.                          Wholesale of PC software and contents                                                    Japan             61.3%
       • CyberLogistics Corporation                  Third-party logistics (3PL) and application service provider (ASP) for                   Japan             77.5%
                                                     ERP and other B2B IT systems
         Ecomanage Corporation                       Development of investment in waste treatment business                                    Japan             40.0%
       • Gallery Automotive Group, LLC.              Car dealer for BMW, Volkswagen, Mazda                                                    U.S.A.           100.0%
         Hitachi Construction Machinery              Sales and service of construction machinery                                              Australia         30.0%
         (Australia) Pty. Ltd.
         Kubota (Deutschland) GmbH                   Sales and service of Kubota tractors, generators, engines and construction   machinery   Germany           20.0%
         Kubota (U.K.) Ltd.                          Sales and service of Kubota tractors, generators, engines and construction   machinery   U.K.              40.0%
         Kubota Canada Ltd.                          Sales and service of Kubota tractors, generators, engines and construction   machinery   Canada            20.0%
         Kubota Europe S.A.                          Sales and service of Kubota tractors, generators, engines and construction   machinery   France            26.2%
         Kubota Tractor Australia Pty. Ltd.          Sales and service of Kubota tractors, generators, engines and construction   machinery   Australia         20.0%
         Logitec Corporation                         Development, manufacturing and sales of peripheral equipment for PCs                     Japan             62.2%

        • Consolidated subsidiary

88   Marubeni Corporation 2003
• Long Island Automotive Group, Inc.      Car dealer for Volvo, Land Rover and Saturn brands                                 U.S.A.           100.0%
• Marubeni Aerospace America              Export of aircraft, engines, onboard equipment, space products and those           U.S.A.           100.0%
  Corporation                             parts to Japan
• Marubeni Aerospace Corporation          Sales, export, import and lease of aircraft, engines, onboard equipment,           Japan            100.0%
                                          satellites and those parts
• Marubeni Airleasing (UK) Ltd.           Aircraft lease/finance transactions                                                U.K.             100.0%
• Marubeni Auto & Construction            Sales, import and export of automobiles and construction machinery,                U.S.A.           100.0%
  Machinery America, Inc.                 and investment
• Marubeni Auto Dirkes GmbH               Car dealer for Nissan, Mitsubishi and Fiat brands                                  Germany          100.0%
• Marubeni Auto Investment (UK) Limited   Investment in motor retail and service industry                                    U.K.             100.0%
• Marubeni Aviation Services Ltd.         Investment in aircraft engine development programs and leasing of aircraft         Cayman Islands   100.0%
• Marubeni Citizen-Cincom Inc.            Sales of Citizen machine tools                                                     U.S.A.            60.0%
• Marubeni Construction Machinery         Sales of construction and mining equipment                                         Japan            100.0%
  Sales, Inc.
• Marubeni Disc Systems, Inc.             Sales of optical disc, CD and DVD machinery                                        U.S.A.            80.0%
  Marubeni Infotec Corporation            Wholesale of PCs and peripheral equipment, semiconductors and                      Japan             60.0%
                                          electronics components
• Marubeni Machinery Co., Ltd.            Sales and distribution of printing machinery and industrial machinery              Japan            100.0%
• Marubeni Techno-Systems Corporation     Sales of production machinery relating to media, food, beverage, packaging,        Japan            100.0%
                                          chemical and environmental equipment
• Marubeni Vehicle Corporation            Export and import of automobiles and parts, construction, mining and               Japan            100.0%
                                          agricultural machinery
  Marubeni-Komatsu Ltd.                   Import, sales and service of construction machinery                                U.K.              40.0%
  Media Vision Inc.                       Development, marketing, and sales of PC/Internet software                          Japan             51.6%
• Meditec Corporation                     Import sales and maintenance of medical equipment, apparatus and accessories       Japan            100.0%
• N.V. Marubeni Auto and Construction     Import, distribution and service of Nissan vehicles and parts                      Belgium          100.0%
  Machinery (Europe) S.A.
• Nissan Adria d.o.o.                     Import, distribution and service of Nissan vehicles and parts                      Slovenia          66.1%
• Nissan Diesel America, Inc.             Import, distribution and service of UD trucks                                      U.S.A.            50.0%
• Nissan Marubeni Ltda.                   Import, distribution and service of Nissan vehicles, trucks and parts              Chile            100.0%
• Nissan Norge AS                         Import, distribution and service of Nissan vehicles and parts                      Norway           100.0%
• Nissan Poland Ltd.                      Import, distribution and service of Nissan vehicles and parts                      Poland           100.0%
• Nissan Sverige AB                       Import, distribution and service of Nissan vehicles and parts                      Sweden           100.0%
  Ogihara Europe Ltd.                     Sales and manufacture of automotive body panels and pressing die                   U.K.              46.5%
  P.T. Astra Multi Finance                Consumer financing of Nissan Diesel and Isuzu vehicles                             Indonesia         20.0%
• Shinnihon Reiki Co., Ltd.               Engineering and construction of industrial use cooling towers and accessories      Japan            100.0%
  Sofmap Co., Ltd.                        Retail of digital products, such as PCs and software                               Japan             25.8%
• Toyota Ghana Company Limited            Import and distribution of Toyota vehicles                                         Ghana            100.0%
• UD Truck (Oceania) Pty. Ltd.            Import and distribution of Nissan Diesel trucks                                    Australia        100.0%
  Unipres Mexicana S.A. de C.V            Sales and manufacture of automotive body panels                                    Mexico            30.6%
  Unipres U.S.A. Inc.                     Sales and manufacture of automotive body panels                                    U.S.A.            32.5%

 IRON & STEEL STRATEGIES AND COORDINATION DEPT.

 company name                             main business                                                                      nationality      ownership

 Marubeni Construction Material Lease     Leasing and sales of temporary construction materials                              Japan             34.3%
 Co., Ltd .
 Marubeni-Itochu Steel Inc.               Manufacture, processing, import, export and sales of steel products                Japan             50.0%
 Thai Cold Rolled Steel Sheet Public      Manufacture of cold-rolled steel sheet                                             Thailand          37.5%
 Co., Ltd.

 UTILITY & INFRASTRUCTURE

 company name                             main business                                                                      nationality      ownership

• Aquasistema Salina Cruz S.A. de C.V.    BOT water recycling and desalination project for PEMEX                             Mexico            50.0%
  BPL Power Projects (AP) Limited         IPP in India                                                                       India             26.0%
  Chengdu Générale des Eaux-Marubeni      BOT water supply project, for Chengdu Municipal Government,                        China             40.0%
  Waterworks Co., Ltd.                    Sichuan Province
  Eastern Power and Electric Company      IPP in Thailand                                                                    Thailand          28.0%
  Limited
• Eurasia Energy & Environment Ltd.       Investment in wind power generation business entity in Spain                       U.K.             100.0%
  Ever Power IPP Company Ltd.             IPP in Taiwan                                                                      Taiwan            25.3%
• Hamanasu Wind Power Corporation         IPP of Shimamaki Wind Farm, Hokkaido                                               Japan            100.0%
  Jenets Co., Ltd.                        Metering of potable water and wastewater usage, utility fee collection services    Japan             47.5%
• Marubeni Asian Power Ltd.               Marketing and development of power projects                                        China            100.0%
• Marubeni Energy Services Corporation    Operation and maintenance of Mindanao Geothermal Power Plant units 1 and 2         Philippines      100.0%
• Marubeni Europower Ltd.                 Execution, marketing, development and investment for power projects in Europe      U.K.             100.0%

 • Consolidated subsidiary

                                                                                                                            Marubeni Corporation 2003     89
       • Marubeni Mindanao Power Holdings          Holding company of geothermal power project in the Philippines                          Philippines      100.0%
         Corporation
       • Marubeni Miravalles Investment Ltd.       Investment in thermal power generation business entity in Costa Rica                    Costa Rica       100.0%
       • Marubeni Pacific Energy Holdings          Holding company of geothermal power project in the Philippines                          Philippines      100.0%
         Corporation
       • Marubeni Power Holding B.V.               Investment in a power project in Tunisia                                                Netherlands      100.0%
       • Marubeni Power International Inc.         Marketing and development of power projects in Central and South America                U.S.A            100.0%
       • Marubeni Power Systems Corporation        Engineering, procurement and construction services, and IPP services                    Japan            100.0%
                                                   including M&A in overseas markets
       • Marubeni Power Ventures, Inc.             Holding company of international power projects                                         U.S.A            100.0%
       • Marubeni Termovalle Investment Limited    Investment in IPP in Colombia                                                           Cayman Islands   100.0%
       • Mibugawa Power Company                    Operation and management of Mibugawa Hydro Power Station                                Japan            100.0%
         Millmerran Power Partners                 Investment in IPP for merchant operations                                               Australia         30.0%
       • Minami-Kyusyu Wind Power Corporation      Sales of wind-generated electricity produced in Kagoshima, Japan                        Japan             80.0%
       • Nippon Utilities Management               Development of water/wastewater business and solid waste business                       Japan             33.3%
       • P.T. Matlamat Cakera Canggih              Marketing, development, contracting and execution for power project in Indonesia        Indonesia         60.0%
         PPN Power Generating Company Limited      IPP in India                                                                            India             26.0%
         San Roque Power Corporation               IPP of San Roque Multipurpose Dam Project                                               Philippines       42.5%
         Sarakitomanai Wind Power Corporation      Sales of wind-generated electricity produced in Hokkaido                                Japan             49.0%
       • SmartestEnergy Ltd.                       Consolidation and sales of electricity and green benefits in the U.K.                   U.K.             100.0%
         Tapal Energy Ltd.                         Sales of diesel-generated electricity produced in Pakistan                              Pakistan          25.0%
       • Transport Systems Engineering Co., Ltd.   Planning and development of transport systems                                           Japan            100.0%
         Uni-Mar Enerji Yatirimlari A.S.           IPP in Turkey                                                                           Turkey            33.3%
       • Yuya Wind Power Corporation               Sales of wind-generated electricity produced in Yamaguchi, Japan                        Japan             90.0%

        PLANT & SHIP

        company name                               main business                                                                           nationality      ownership

         Compania de Nitrogeno de Cantarell        Production and supply of nitrogen for PEMEX                                             Mexico            35.0%
         S.A. de C.V.
         Compania de Servicios de Compresion       Compression of associated gas for Pemex Exploracion y Produccion                        Mexico            50.0%
         de Campeche, S.A. de C.V.                 at Cantarell oil field
       • Japan Indonesia Petrochemical             Investment and related services for Chandra Asri Project                                Japan             84.6%
         Investment Corporation
         KAFCO Japan Investment Co., Ltd.          Investment and related services for Karnaphuri Fertilizer Co., Ltd.                     Japan             26.8%
       • Koyo Line Ltd .                           Ship management, brokerage and trade of ship equipment and others                       Japan            100.0%
       • MARCOP Inc .                              Production and sales of pulverized coal to USS Gary works                               U.S.A.           100.0%
       • Marubeni Plant Contractor Inc.            Civil work and installation of plants                                                   U.S.A.           100.0%
       • Marubeni Protechs Corporation             Export, transport and installation of equipment and machines, plant                     Japan            100.0%
                                                   construction and overseas development assistance for cement, pulp and paper,
                                                   nonferrous metals, sugar, plywood and steel, oil and petrochemical plants
       • Marubeni Tekmatex Corporation             Import, export and domestic sales of textile machinery                                  Japan            100.0%
       • Marubeni Tekmatex (Thailand) Co., Ltd.    Sales and service of textile machinery                                                  Thailand          60.6%
       • MCP Iron Oxide, Inc.                      Investment for American Iron Oxide Company, a joint venture manufacturing               U.S.A.           100.0%
                                                   high-purity iron oxide
         PT. Chandra Asri                          Manufacture and sales of petrochemical products                                         Indonesia         20.8%
         PT. Tanjungenim Lestari Pulp & Paper      Production and sales of bleached kraft pulp                                             Indonesia         45.0%
         Royal Maritime Corporation                Ship leasing, finance and ship owning                                                   Liberia           49.0%
         Sumatra Pulp Corporation                  Investment and consulting services for Musi Pulp Project                                Japan             49.9%
       • Swift Spinning Inc.                       Production of cotton yarns                                                              U.S.A.           100.0%

        DEVELOPMENT & CONSTRUCTION

        company name                               main business                                                                           nationality      ownership

       • Benny Estate Service Co., Ltd.            Property management of condominiums, buildings and commercial complexes                 Japan             99.3%
       • Fuyo Kanko Co., Ltd.                      Operation of Fuyo Country Golf Club                                                     Japan             74.5%
       • Kohei Co., Ltd.                           Operation of four golf clubs                                                            Japan            100.0%
         Koshigaya Community Plaza Co., Ltd.       Development and leasing of commercial complexes                                         Japan             43.0%
         Lima Land, Inc .                          Development and sales of industrial estate in Batangas State in the Philippines         Philippines       40.0%
       • Marubeni Real Estate Co., Ltd.            Development and leasing of real estate                                                  Japan            100.0%
       • Marubeni Real Estate Sales Co., Ltd.      Sales and marketing of real estate                                                      Japan            100.0%
       • Marubeni Setzbi Corporation               Engineering and construction of airconditioning systems, facilities and snow machines   Japan             75.4%
       • P.T. Megalopolis Manunggal                Development, sales and operation of industrial estate in Bekasi, Indonesia              Indonesia         60.0%
         Industrial Development




        • Consolidated subsidiary

90   Marubeni Corporation 2003
  P.T. Mekanusa Cipta and four companies    Housing development in Cibubur, Indonesia                                              Indonesia       26.0%
• Park Lane Co., Ltd.                       Operation of Hotel Park Lane Tsurumi, Nishikasai and spa resort                        Japan          100.0%
• Shanghai House Property Development       Development of housing estates for local residents in Shanghai                         China           60.0%
  Co., Ltd .
  Shanghai International Realty Co., Ltd.   Leasing of housing for expatriates in Shanghai                                         China           30.0%
  Sin Heap Lee-Marubeni Sdn. Bhd.           Development and sales of housing in suburb of Kuala Lumpur and operation               Malalysia       40.0%
                                            of golf course
  Tipness Co., Ltd .                        Operation of sports club and facilities                                                Japan           28.6%
• Tsunagu Network Communications, Inc.      Internet service provider for condominiums                                             Japan           60.0%

 FINANCE & LOGISTICS BUSINESS

 company name                               main business                                                                          nationality    ownership

  Eastern Sea Laem Chabang Terminal         Container terminal operation                                                           Thailand        29.0%
  Co., Ltd.
  GCI Asset Management, Inc.                Investment advisory house                                                              Japan           49.7%
  Lima Logistics Corporation                Warehousing and operation of inland container depot                                    Philippines     42.8%
• Marnix Corp.                              Insurance broker                                                                       Japan          100.0%
• Marnix Europe Ltd.                        Insurance broker                                                                       U.K.           100.0%
• Marubeni Document Systems Inc.            Preparation of shipping documentation                                                  Japan          100.0%
• Marubeni International Finance p.l.c.     Financial services and investment                                                      U.K.           100.0%
• Marubeni Logistics Corp.                  Warehousing and total logistics services                                               Japan          100.0%
• Marubeni Safenet Co., Ltd.                Insurance agency                                                                       Japan          100.0%
• Marubeni Transport Service Corp.          Total logistics services                                                               U.S.A.         100.0%
  MG Leasing Corporation                    Lease and sales of plants, machinery and equipment                                     Japan           25.0%
  Shanghai Wai-hong International           Warehousing and total logistics services                                               China           25.0%
  Logistics Co., Ltd.

 TELECOM & INFORMATION

 company name                               main business                                                                          nationality    ownership

 Hewlett-Packard Solutions Delivery, Ltd.   Integration, consultation and other related services for information systems           Japan           34.0%
 Japan Cablenet Holdings Limited            CATV and telecommunication operation, and management of CATV operators                 Japan           23.0%
 Koala Television Co., Ltd.                 CATV services in Matsudo and Nagareyama, Chiba, Japan                                  Japan           20.4%
 Marunouchi Direct Access Ltd.              Area local exchange carrier, providing last-mile solutions to supply dark fiber        Japan           49.0%
                                            in Marunouchi
  Mighty Card Corporation                   Development and sales of the contactless IC tag and related systems, etc.              Japan           39.0%
  Nasca Corporation                         Sales and rental of prepaid card system for pachinko games                             Japan           41.4%
  LCA Holdings Pty. Ltd.                    Sales of Iwasaki lamps, lighting equipment and fixtures                                Australia       45.0%
• Global Access Ltd.                        Providing international/domestic combined bandwidth via own fiber-optic                Japan          100.0%
                                            cable (Type I Carrier)
• Global Solution KK                        Internet access service, ASP and iDC service provider (Type II Carrier)                Japan          100.0%
• Marubeni Information Systems Co., Ltd.    Operation and development of information and communication systems                     Japan           66.0%
• Marubeni Network Systems Corporation      Global network solutions and various telecommunication services                        Japan           81.0%
• Marubeni Solutions Corporation            Sales of computers, network products, semiconductor-related products, and SI           Japan           91.0%
• Marubeni Telecom Co., Ltd.                Sales of telecommunications services and equipment, IT solutions and                   Japan           70.8%
                                            mobile contents
• Marubeni Telemarketing Corporation        Provider of a range of customer support solutions via multimedia call                  Japan          100.0%
                                            center facilities
• Metro Access KK                           Type I Carrier providing broadband communication service to corporate users            Japan           80.0%
• Mystery Channel Inc.                      Broadcast of Mystery Channel on satellite broadcasting and CATV                        Japan           67.2%
• Nexion Corporation                        Video transmission service, broadband media service                                    Japan           96.4%
• Marubeni Solutions USA Corporation        Marketing and sales of advanced electronic equipment/devices                           U.S.A.          91.0%
• Marubeni Network Systems (Europe) B.V.    Sales and engineering of telecom systems mainly in Europe and Africa                   Netherlands    100.0%
• Marpless Communication Technologies       Sales and engineering of telecommunication equipment                                   South Africa    51.0%
  (Pty.) Ltd.

 OTHERS

 company name                               main business                                                                          nationality    ownership

  Avanti Staff Corporation                  Temporary staff placement and personnel services                                       Japan           42.5%
• Marubeni Management Resources             Management services and consulting                                                     Japan          100.0%
  Corporation
  Shanghai Baihong Trading Co., Ltd.        Wholesaling of domestic and imported commodities, export of domestic products,         China           49.0%
                                            storage, product processing, delivery, and retailing of self-supporting commodities

                                                                                                                                     (As of July 1, 2003)
 • Consolidated subsidiary

                                                                                                                                  Marubeni Corporation 2003   91
        Organization



              General Meeting of
                Shareholders
                                                                              Agri-Marine Products Div.


                                       Corporate Auditors                     Textile Div.
               Board of Directors

                                    Board of Corporate Auditors
                                                                              Forest Products &
                                                                              General Merchandise Div.

                    President        Corporate Auditor Dept.
                                                                              Chemicals Div.



                                     Corporate Management                     Energy Div.
                                          Committee

                                                                              Metals & Mineral Resources Div.
                                          Committee of
                                     Chief Operating Officers
                                                                              Transportation &
                                                                              Industrial Machinery Div.
                                          Committee of
                                        Executive Officers
                                                                              Iron & Steel Strategies and
                                                                              Coordination Dept.


                                                                              Utility & Infrastructure Div.
                                    Audit Dept.
                                    General Affairs Dept.                     Plant & Ship Div.
                                    Human Resources Dept.
                                    Corporate Communications Dept.
                                                                              Development & Construction Div.
                                    Corporate Planning & Coordination Dept.
                                    Corporate Strategies Dept.
                                    Information Strategy Dept.                Finance & Logistics Business Div.

                                    Corporate Accounting Dept.
                                    Finance Dept.                             Telecom & Information Div.
                                    Risk Management Dept.
                                    Legal Dept.                               Business Incubation Dept.
                                    Osaka Planning & Administration Dept.

                                                                              Domestic Branches & Offices



                                                                              Overseas Branches & Offices




                                                                                                (As of April 1, 2003)


92   Marubeni Corporation 2003
       Management Policies at Marubeni

       Company Doctrine
       Taking up the spirits of “Fairness — Innovation — Harmony,” the Marubeni Group aims to proudly
       contribute to the economy and society though fair and upright corporate activities.

       Management Policy
       Marubeni aims to be a resilient Group possessing the No.1 Portfolio Unit in each industry.
       Goals
       • Attain a solid financial structure
       • Achieve net income of at least 50 billion yen

       Business Strategy
       Marubeni practices sound and strong operation through implementation of a diversified business model strategy.
       Each of our models is based upon risk-return and cash flow management.




Corporate Data

Founded                                                       Major Stockholders
1858                                                          Sompo Japan Insurance Inc.
                                                              Japan Trustee Services Bank, Ltd. (Trust Account)
Incorporated
                                                              J.P. Morgan Trust Bank Ltd. (Tax-exempt Account)
December 1, 1949
                                                              The Master Trust Bank of Japan, Ltd. (Trust Account)
Paid-in Capital                                               The Yasuda Mutual Life Insurance Company
¥194,039,842,190                                              Mizuho Corporate Bank, Ltd.
                                                              The Tokio Marine and Fire Insurance Company, Limited
Number of Shareholders
                                                              UFJ Trust Bank Ltd. (Trust Account “A”)
163,891
                                                              Nippon Life Insurance Company
Number of Shares Issued and                                   The Nichido Fire and Marine Insurance Company, Limited
Outstanding
                                                              Stock Listings
1,494,021,081
                                                              Sapporo, Tokyo, Nagoya, Osaka, Fukuoka,
Number of Employees                                           Düsseldorf and Frankfurt stock exchanges
3,914 (plus 1,801 overseas employees)                         Transfer Agent of Common Stock
Number of Domestic Offices*                                   Mizuho Trust & Banking Co., Ltd.
17                                                            Home Page Address
Number of Overseas Branches & Offices and                     http://www.marubeni.com
Overseas Corporate Subsidiaries*
                                                              For further information, please contact:
53 overseas branches & offices and 28 overseas
                                                              Corporate Communications Dept., Marubeni Corporation,
corporate subsidiaries with 77 offices
                                                              4 -2, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-8088, Japan
for a total of 130 offices in 75 countries
                                                              Tel: 81-3-3282-2111 Fax: 81-3-3282-4241
                                                              E-mail: TOKB191@marubenicorp.com


                                                                                     (As of March 31, 2003, except * as of April 1, 2003)




                                                                                                            Marubeni Corporation 2003       93
http://www.marubeni.com




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